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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO.___) *
TYLAN GENERAL, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.001 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
902169101
- --------------------------------------------------------------------------------
(CUSIP Number)
Richard L. Waggoner, Gardere & Wynne, L.L.P.
1601 Elm Street, Suite 3000, Dallas, Texas 75201-4761, (214) 999-3000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
JULY 3, 1996
- --------------------------------------------------------------------------------
(DATE OF EVENT WHICH REQUIRES FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person:(1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.
See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE> 2
SCHEDULE 13D
CUSIP NO. 902169101 PAGE 2 OF 8 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Don E. Whitson
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
393,572
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
393,572
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
393,572
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[x]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.025%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND SIGNATURE ATTESTATION.
<PAGE> 3
SCHEDULE 13D
CUSIP NO. 902169101 PAGE 3 OF 8 PAGES
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Leo E. Whitson
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [x]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) [ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
379,731
SHARES -------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 0
------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
379,731
PERSON ------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
0
- -------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
379,731
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[x]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
4.848%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTION BEFORE FILLING OUT!
INCLUDED BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND SIGNATURE ATTESTATION.
<PAGE> 4
Item 1. Security and Issuer.
This Schedule 13D (this "Statement") relates to the shares of Common
Stock, $0.001 par value (the "Common Stock"), of Tylan General, Inc., a
Delaware corporation ("Tylan General"), which has its principal executive
offices located at 15330 Avenue of Science, San Diego, California 92128.
Item 2. Identity and Background.
(a), (b) and (c): The following sets forth the information
required by Items 2(a), (b) and (c):
1. Don E. Whitson is the Vice Chairman of the Board of Directors
of Tylan General and the Chief Administrative Officer of Tylan
General, and his business address is 2201 Avenue K, Plano,
Texas 75074, the address for Span Instruments, Inc. ("Span").
2. Leo E. Whitson is the Chairman of the Board of Directors of
Span, and his business address is the Span Address which is
2201 Avenue K, Plano, Texas 75074.
(d) None of the Reporting Persons has, during the last five years,
been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors).
(e) None of the Reporting Persons has, during the last five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
(f) Don E. Whitson and Leo E. Whitson are citizens of the United
States.
Item 3. Source and Amount of Funds or Other Consideration.
The following table sets forth the aggregate consideration paid for
the Tylan General Common Stock by each Reporting Person. The table lists the
actual owners of the shares.
<TABLE>
<CAPTION>
Name Number of Aggregate
- ---- --------- ---------
Shares Consideration
------ -------------
<S> <C> <C>
Don E. Whitson 393,572 *
Leo E. Whitson 1996 Trust 379,731 **
</TABLE>
*Don E. Whitson beneficially owns 393,572 shares of Common Stock of Tylan
General which were obtained pursuant to the conversion of 80,440 shares of
Common Stock of Span pursuant to an Agreement and Plan of Reorganization, dated
as of July 3, 1996, by and among Tylan General, Tylan General Acquisition
Subsidiary, Inc., a Delaware corporation ("Tylan General Sub"), Span, and all
the shareholders of Span ( the "Agreement and Plan of Reorganization").
Subject to the terms and conditions of the Agreement and Plan of
Reorganization, Tylan General Sub was merged with and into Span on July 3,
1996, with Span being the surviving corporation, and Tylan General owns all of
the issued and outstanding shares of Common Stock of Span.
**Leo E. Whitson beneficially owns 379,731 shares of Common Stock of Tylan
General (the "Trust Shares"). The Trust Shares are held of record by the Leo
E. Whitson 1996 Trust (the "Trust"), as to which Leo E. Whitson, as Trustee,
has investment power and voting power pursuant to the Trust Agreement dated as
of February 16, 1996, by and between Leo E. Whitson, as grantor, and Leo E.
Page 4 of 8
<PAGE> 5
Whitson, as trustee (the "Trust Agreement"). The Trust Shares were obtained by
exchanging 77,611 shares of Common Stock of Span, held of record by the Trust,
pursuant to the Agreement and Plan of Reorganization.
Item 4. Purpose of Transaction.
Each of the persons reporting on this Statement has acquired their
respective shares of Tylan Common Stock to hold primarily for investment.
Depending upon market conditions and other factors, each person reporting on
this Statement may, from time to time, either jointly or individually, acquire
additional shares of Tylan General Common Stock or dispose of all or any part
of their respective holdings of Tylan General Common Stock.
Except as set forth below, no person reporting on this Statement has
any present plans to participate in the management of Tylan General; to cause
it to engage in any extraordinary transactions; to sell or transfer any of its
material assets or the assets of any of its subsidiaries; to effect any change
of its management or its directors, business, corporate structure,
capitalization, dividend policy, articles of incorporation, or bylaws; or to
delist or terminate the registration of any securities of Tylan General; but
each reserves the right to propose or undertake or participate in any of the
foregoing actions in the future.
Pursuant to the Agreement and Plan of Reorganization, as a condition
precedent to Span's obligations, Don E. Whitson has been elected to serve a
full term on the Tylan General Board of Directors and Don E. Whitson will serve
as Vice Chairman and Chief Administrative Officer of Tylan General.
Pursuant to the Agreement and Plan of Reorganization the shareholders
of Span (including each of the Reporting Persons) has certain registration
rights with respect to shares of the Tylan General Common Stock.
Item 5. Interest in Securities of the Issuer.
(a) and (b): The following table sets forth the information required by
Item 5(a) and (b):
<TABLE>
<CAPTION>
Number of Voting Dispositive %
Name Shares Power Power Ownership
---------- ----------- ------ --------- ---------
<S> <C> <C> <C> <C>
Don E. Whitson 393,572 sole sole 5.025%
Leo E. Whitson 379,731(1) sole sole 4.848%
</TABLE>
- ---------------
(1) Represents the shares held of record by the Trust.
The aggregate number of shares of Tylan General Common Stock held by
the Reporting Persons is 773,303. Each of the Reporting Persons declares that
the filing of this Statement shall not be construed as an admission that he is,
for purposes of Section 13(d) or 13(g) of the Securities Act of 1933, as
amended, the beneficial owner of all of the securities covered by this
Statement. Each of the Reporting Persons disclaims beneficial ownership of all
of the shares of Tylan General Common Stock covered by this Schedule 13D except
for the shares indicated as being beneficially held by him in the table above.
Page 5 of 8
<PAGE> 6
(c) The following are the transactions in Tylan General Common
Stock effected by or for the Reporting Persons within the last 60 days prior to
the date of this Schedule 13D:
<TABLE>
<CAPTION>
Number Price
Date Purchaser of Shares of Shares
---- --------- --------- ---------
<S> <C> <C> <C>
07/03/96 Don E. Whitson 393,572 *
07/03/96 Leo E. Whitson 379,731 *
</TABLE>
* Represents the shares obtained pursuant to the Agreement and Plan of
Reorganization.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Leo E. Whitson is the father of Don E. Whitson, and as a result, they
may, from time to time, have discussions regarding their investment in the
Tylan General Common Stock. Except as hereinbefore described and except for
past or future communications and discussions among themselves regarding their
investment in shares of Tylan General Common Stock, there are no current
contracts, arrangements, understandings or legal relationships among the
persons reporting on this Statement with respect to the acquiring, holding,
voting or disposition of Tylan General Common Stock.
Pursuant to the Agreement and Plan of Reorganization the shareholders
of Span (including each of the Reporting Persons) has certain registration
rights with respect to shares of the Tylan General Common Stock.
Pursuant to the Stock Settlement Agreement entered into as of July
___, 1996, by and between Don E. Whitson and Linda Sue Dunkel (the "Stock
Settlement Agreement"), Don E. Whitson has agreed to transfer to Linda Sue
Dunkel, at some future date, ten percent of his shares (or 39,357) of Tylan
General Common Stock.
Item 7. Material to be Filed as Exhibits.
Exhibit 99A - Agreement Regarding Filing of Schedule 13D among the
parties to this Statement
Exhibit 99B - Trust Agreement dated as of February 16, 1996, by and
between Leo E. Whitson, as grantor, and Leo E.
Whitson, as trustee.
Exhibit 99C - Agreement and Plan of Reorganization
Exhibit 99D - Stock Settlement Agreement
Page 6 of 8
<PAGE> 7
Signature
After reasonable inquiry and to the best of the undersigned's
knowledge and belief, each of the undersigned certifies that the information
set forth in this Statement is true, complete and correct.
/s/ DON E. WHITSON
-----------------------------------
Don E. Whitson
/s/ LEO E. WHITSON
-----------------------------------
Leo E. Whitson
July 12, 1996
Page 7 of 8
<PAGE> 8
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
99A - Agreement Regarding Filing of Schedule 13D among the
parties to this Statement
99B - Trust Agreement dated as of February 16, 1996, by and
between Leo E. Whitson, as grantor, and Leo E.
Whitson, as trustee.
99C - Agreement and Plan of Reorganization
99D - Stock Settlement Agreement
</TABLE>
<PAGE> 1
Exhibit 99A
AGREEMENT REGARDING FILING SCHEDULE 13D
Each of the undersigned hereby agrees that the Schedule 13D to which
this agreement is filed as an exhibit be filed with the Securities and Exchange
Commission on behalf of the parties hereto, and hereby represents to the other
party hereto that he is eligible to use Schedule 13D. Each of the undersigned
agrees that he is responsible for the timely filing of Schedule 13D and any
amendments thereto, and for the completeness and accuracy of the information
concerning himself contained therein, and that neither of the parties hereto is
responsible for the completeness or accuracy of the information concerning the
other party, unless he knows or has reason to believe that the information
concerning the other party is inaccurate.
Date: July 12, 1996
/s/ LEO E. WHITSON
-----------------------------------
Leo E. Whitson
/s/ DON E. WHITSON
-----------------------------------
Don E. Whitson
Page 8 of 8
<PAGE> 1
Exhibit 99B
TRUST AGREEMENT
This Trust Agreement is made and entered into this 16th day of February,
1996, by and between Leo E. Whitson, as grantor (the "Grantor"), and Leo E.
Whitson, as trustee.
Article I
CREATION OF TRUST
The Grantor has assigned, transferred, and delivered to the trustee the
property described on Exhibit A attached hereto and incorporated herein by
reference ("trust assets"). In consideration of the mutual covenants made
below, the Grantor and the trustee agree that the trustee shall hold the trust
assets and all proceeds and accumulations with respect to the trust assets,
according to the terms of this Agreement. The trusts established under this
Agreement shall collectively be known as the "Leo E. Whitson 1996 Trust"
("Trust").
Article II
NO ADDITIONS TO THE TRUST
The trustee shall not accept any additional contributions to any trust
under this Agreement.
Article III
DISPOSITIVE PROVISIONS
The Grantor intends that the interests of the Grantor and the Grantor's
spouse, Jean W. Whitson ("Grantor's Spouse"), under this Article be "qualified
annuity interests" under Section 2702(b)(1) of the Code and the related
provisions of Treasury Regulation Section 25.2702-3(b) and (d), and all
provisions of this Agreement shall be interpreted accordingly. The trust
assets shall be administered as follows:
A. Grantor's Qualified Annuity Interest. From the date of this
Agreement until the second (2nd) anniversary of this Agreement or the Grantor's
death, whichever is earlier ("Trust Term"), the Trustee shall pay the Annuity
Amount (defined below) to Grantor or, if the Grantor is not then living, to the
Grantor's estate (the Grantor or the Grantor's estate hereinafter referred to
as the "Annuitant"). The Annuity Amount for each year shall be the following
percentages of the initial fair market value of the assets contributed to the
Trust as finally determined for federal gift tax purposes:
<TABLE>
<CAPTION>
Year in Which Percentage of Initial
Anniversary Date Falls: Fair Market Value
----------------------- -----------------
<S> <C>
1997 49.0550%
1998 58.8660%
</TABLE>
The trustee shall pay the Annuity Amount to the Annuitant in equal quarterly
installments on the day preceding the day of the month in which this Agreement
is executed in February, May, August, and November (the first such installment
to be on the above designated day in May of 1996).
B. Distribution Upon Expiration of Trust Term if Grantor is Living.
If the Grantor is living upon expiration of the Trust Term, the trustee, after
paying to the Annuitant the remaining Annuity Amount, shall distribute the
remaining trust assets as follows:
- 1 -
<PAGE> 2
(1) to Donald E. Whitson if he is then living; or
(2) if Donald E. Whitson is not then living, to the then
living lineal descendants, per stirpes, of Donald E. Whitson; or
(3) if none of the lineal descendants of Donald E. Whitson are
then living, the trustee shall divide the remaining trust assets into two equal
parts ("Part A" and "Part B") and shall distribute Part A and Part B as
follows:
a. the trustee shall distribute Part A as follows:
(i) to Melanie Whitson Vaughn if she is then
living; or
(ii) if Melanie Whitson Vaughn is not then
living, to the then living lineal descendants, per stirpes, of Melanie Whitson
Vaughn; or
(iii) if none of the lineal descendants of Melanie
Whitson Vaughn are then living, to those persons who would inherit from the
Grantor under the laws of intestate succession then in effect in the State of
Texas if the Grantor had died at such time a single person without descendants.
b. the trustee shall distribute Part B as follows:
(i) to the Jean W. Whitson Trust (to be held
subject to the provisions of the Jean W. Whitson Trust) if Jean W. Whitson is
then living; or
(ii) if Jean W. Whitson is not then living, to
Melanie Whitson Vaughn; or
(iii) if Melanie Whitson Vaughn is not then
living, to the then living lineal descendants, per stirpes, of Melanie Whitson
Vaughn; or
(iv) if none of the lineal descendants of Melanie
Whitson Vaughn are then living, to those persons who would inherit from the
Grantor under the laws of intestate succession then in effect in the State of
Texas if the Grantor had died at such time a single person without descendants.
Notwithstanding the foregoing, if at the time of such distribution any such
lineal descendant of a deceased child of the Grantor is under the age of thirty
(30), then the distribution which, but for this sentence, would have been made
to such lineal descendant of a deceased child of the Grantor instead shall be
distributed to the trustee of the Contingent Trusts, to be held in trust for
that person under the provisions of the Contingent Trusts.
C. Distribution Upon Expiration of Trust Term if Grantor is Not
Living. If the Trust Term terminates due to the Grantor's death prior to the
second (2nd) anniversary of this Agreement ("Anniversary Date"), the trustee
shall pay to the Grantor's estate any part of the Annuity Amount that is
accrued and undistributed at the Grantor's death based on a daily proration
through the date of the Grantor's death. The remaining trust assets shall be
administered under either paragraph D or paragraph E of this Article, as the
case may be.
D. Distribution Upon Death of Grantor Before Anniversary Date if
Grantor is Survived by Grantor's Spouse and if Marital Trust is not Revoked.
(1) Revocable Contingent Marital Trust. If the Grantor dies
prior to the Anniversary Date and is survived by the Grantor's Spouse, the
trustee shall hold the remaining trust assets in trust for benefit of the
Grantor's Spouse, and such trust shall be known as the Marital Trust.
- 2 -
<PAGE> 3
(2) Right to Revoke Marital Trust. Notwithstanding
subparagraph (1) of this paragraph, the Grantor may revoke the provisions for
the Grantor's Spouse contained in this paragraph D either by notice to the
trustee or by his will; to the extent the Grantor revokes the Grantor's
Spouse's interest under this paragraph D, this Agreement shall be administered
under paragraph E of this Article as if the Grantor's Spouse had predeceased
the Grantor. To the extent the Grantor has not revoked the interest of the
Grantor's Spouse, the trustee shall administer the Marital Trust as follows:
a. Payment of Annuity Amount. The trustee shall pay,
until the first to occur of (i) second (2nd) anniversary of the Grantor's death
or (ii) the death of the Grantor's Spouse ("Marital Trust Term"), to the
Grantor's Spouse or, if the Grantor's Spouse is deceased, to the Grantor's
Spouse's estate ("Marital Trust Annuitant"), the Marital Trust Annuity Amount
that shall equal the following:
(i) For the year of the Grantor's death, the
portion of the Annuity Amount that is not payable to the Grantor or the
Grantor's estate by reason of the Grantor's death; and
(ii) For each subsequent full year beginning
after the year in which Grantor died, an Annuity Amount equal to the prior
year's Annuity Amount that is increased by twenty percent (20%).
The trustee shall pay the Marital Trust Annuity Amount to the Marital Trust
Annuitant in equal quarterly installments on the day of the month in which the
Grantor died.
b. Payment of Income. Beginning on the date of the
Grantor's death and continuing for the lifetime of the Grantor's Spouse, the
trustee shall also pay the income of the Trust which exceeds the Annuity Amount
payable for that year (if any) to or for the benefit of the Grantor's Spouse at
least annually.
c. General Power of Appointment. The Grantor's Spouse
shall have the power to appoint all or any part of the income or principal of
the Marital Trust to any persons or organizations, including herself, her
creditors, her estate, or creditors of her estate, by deed or deeds during the
Grantor's Spouse's life or by will at her death.
d. Disposition of Principal. The Marital Trust shall
terminate upon the Grantor's Spouse's death. The trustee shall distribute all
remaining properties of the Marital Trust not passing pursuant to a valid
exercise of the general power of appointment granted to the Grantor's Spouse as
follows:
(i) to Donald E. Whitson if he is then living;
or
(ii) if Donald E. Whitson is not then living, to
the then living lineal descendants, per stirpes, of Donald E. Whitson; or
(iii) if none of the lineal descendants of Donald
E. Whitson are then living, to Melanie Whitson Vaughn if she is then living; or
(iv) if Melanie Whitson Vaughn is not then
living, to the then living lineal descendants, per stirpes, of Melanie Whitson
Vaughn; or
(v) if none of the lineal descendants of Melanie
Whitson Vaughn are then living, to those persons who would inherit from the
Grantor under the laws of intestate succession then in effect in the State of
Texas if the Grantor had died at such time a single person without descendants.
Notwithstanding the foregoing, if at the time of such distribution any such
lineal descendant of a deceased child of the Grantor is under the age of thirty
(30), then the distribution which, but for this sentence, would have been made
to such lineal descendant of a deceased child of the Grantor instead shall be
- 3 -
<PAGE> 4
distributed to the trustee of the Contingent Trusts, to be held in trust for
that person under the provisions of the Contingent Trusts.
e. Marital Trust Assets. If the Marital Trust
consists of any unproductive property, the Grantor's Spouse may require the
trustee to either make the property productive or convert it to productive
property within a reasonable time.
E. Distribution Upon Death of Grantor Before Anniversary Date if
Grantor's Spouse Predeceased Grantor or if Marital Trust Revoked. If the
Grantor dies prior to Anniversary Date and if either (i) the Grantor has
revoked the Marital Trust provided for the Grantor's Spouse or (ii) the
Grantor's Spouse does not survive the Grantor, then the Annuity Amount shall be
paid to the Grantor's estate until the Anniversary Date. Following the
Anniversary Date, the trust assets subject to the revocation or the remaining
trust assets, as the case may be, shall be distributed to, or in trust for,
such appointees as the Grantor may appoint by will. In the absence of such
appointment, the remaining trust assets shall be distributed pursuant to
paragraph B of Article III determined as if the Grantor were living on the
Anniversary Date.
F. Specific Trustee Directions. The trustee shall abide by the
following terms and conditions in administering the trusts under this Article.
(1) Prorated Annuity Amount. The trustee shall prorate the
Annuity Amount and the Marital Trust Annuity Amount on a daily basis for any
short period (of less than 12 months) of the Trust Term and the Marital Trust
Term, in the manner prescribed by section 25.2702-3(b)(3) of the Regulations.
(2) Source of Payment. Both the Annuity Amount and the
Marital Trust Annuity Amount shall be paid from income and, to the extent
income is insufficient, from principal.
(3) Distributions. The trustee shall not make any
distributions from the Trust to or for the benefit of anyone other than the
Grantor during the Trust Term while the Grantor is living. The trustee shall
not make any distributions from the Marital Trust to or for the benefit of
anyone other than the Grantor's Spouse while the Grantor's Spouse is living.
(4) Fiscal Year. The fiscal year and tax year of the Trust
shall be a calendar year.
(5) Incorrect Valuation. If the initial net fair market value
of the trust assets (or the Marital Trust assets) is determined incorrectly,
then, within a reasonable period of time after the final determination of the
correct value, the trustee shall pay (in the case of an undervaluation) to the
Annuitant or Marital Trust Annuitant, as the case may be, or the Annuitant or
Marital Trust Annuitant, as the case may be, shall pay (in the case of an
overvaluation) to the trustee an amount equal to the difference between the
Annuity Amount (or the Marital Trust Annuity Amount) properly payable and the
Annuity Amount (or the Marital Trust Annuity Amount) actually paid.
(6) Reimbursement for Income Tax Liability. The trustee shall
reimburse the Grantor for that portion of the Grantor's income tax liability
that is attributable to the excess of trust income (including capital gain)
over the amount actually distributed.
(7) Commutation Prohibited. Commutation of either the
Annuitant's or Marital Trust Annuitant's interest in any trust established
under this Article at any time is expressly prohibited.
(8) Qualified Retained Annuity Trust. No power, right or duty
under this Agreement shall be effective or exercisable to the extent to which
it would cause the Grantor's or the Grantor's Spouse's retained annuity
interests hereunder to fail to qualify as a "qualified annuity interest" under
Section 2702(b)(1) of the Code.
- 4 -
<PAGE> 5
G. Grantor's Power of Substitution. Notwithstanding any other
provision of this Agreement, at any time during the Trust Term, the Grantor
shall have the power, exercisable in a nonfiduciary capacity, (either
personally or by an attorney-in-fact under a power of attorney expressly
referring to this power) without the consent or approval of any person in any
capacity, to reacquire any property held by the Trust by substituting other
property having the same fair market value (determined without regard to the
nature of the assets or the interests or desires of any beneficiary (including
the relative value of the asset to any person having an interest in this
trust)). The Grantor intends that during the Trust Term the Grantor shall be
treated as the owner of the entire Trust for income tax purposes under Subpart
E, Part I, Subchapter J, Chapter 1 of the Code.
Article IV
THE CONTINGENT TRUSTS
All properties held in a trust for a lineal descendant of a deceased
child of the Grantor under this Article pursuant to any provision of this
Agreement shall be held in one separate trust for that person. As used or
applied below in this Article with respect to each trust, the term "the
beneficiary" refers to that person for whom the trust is held. Each trust
shall be named after the beneficiary thereof. The trusts described in this
Article shall be known collectively as the "Contingent Trusts". Each of those
trusts shall be held under the following provisions:
A. Income and Principal. The trustee, in its sole discretion, may
accumulate all or any part of the net income of the trust and may distribute
all or any part of the net income and principal of the trust to the
beneficiary, in such amounts as the trustee may determine is necessary for his
health, education (including college and professional school), maintenance, or
support in his accustomed manner of living. In exercising its discretion with
respect to distributions of income and principal under this paragraph, the
trustee shall take into consideration all resources available to the
beneficiary and the obligation of any person to support him. The trustee may
accumulate and add to principal any net income not distributed during a trust
fiscal year.
B. Termination. When the beneficiary attains age thirty (30), the
trust shall terminate and the trustee shall distribute all remaining properties
of the trust to the beneficiary. If the beneficiary should die prior to
attaining age thirty (30), the trust shall terminate upon the beneficiary's
death and the trustee shall distribute all remaining properties of the trust as
follows:
(1) to the beneficiary's then living lineal descendants, per
stirpes; or
(2) if there are none, to the then living lineal descendants,
per stirpes, of the beneficiary's ancestor who is a child of the Grantor; or
(3) if there are none, to the Grantor's then living lineal
descendants, per stirpes; or
(4) if there are none, to those persons who would inherit from
the Grantor under the laws of intestate succession then in effect in the State
of Texas if the Grantor had died at such time a single person without
descendants.
Notwithstanding the above, if any property would pass under the previous part
of this paragraph to a lineal descendant of the Grantor who is then the
beneficiary of a trust created by this Article, that property instead shall be
retained by the trustee and added to the properties of that trust.
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Article V
THE JEAN W. WHITSON TRUST
The trust described in this Article shall be known as the Jean W.
Whitson Trust and shall be held under the following provisions:
A. Income and Principal. The trustee, in its sole discretion, may
accumulate all or any part of the net income of the Jean W. Whitson Trust and
may distribute all or any part of the net income and principal of the Jean W.
Whitson Trust to the Grantor's Spouse as the trustee in its sole discretion may
determine is necessary for the Grantor's Spouse's health, maintenance, or
support in the Grantor's Spouse's accustomed manner of living. In exercising
its discretion with respect to distributions of income and principal under this
paragraph, the trustee may consider other resources available to the Grantor's
Spouse. The trustee shall accumulate and add to principal any net income not
distributed during a trust fiscal year.
B. Disposition of Principal. The Jean W. Whitson Trust shall
terminate upon the Grantor's Spouse's death. The trustee then shall distribute
the remaining property of the Jean W. Whitson Trust as follows:
(1) to Melanie Whitson Vaughn if she is then living; or
(2) if Melanie Whitson Vaughn is not then living, to the then
living lineal descendants, per stirpes, of Melanie Whitson Vaughn; or
(3) if none of the lineal descendants of Melanie Whitson
Vaughn are then living, to those persons who would inherit from the Grantor
under the laws of intestate succession then in effect in the State of Texas if
the Grantor had died at such time a single person without descendants.
Notwithstanding the foregoing, if at the time of such distribution any such
lineal descendant of a deceased child of the Grantor is under the age of thirty
(30), then the distribution which, but for this sentence, would have been made
to such lineal descendant of a deceased child of the Grantor instead shall be
distributed to the trustee of the Contingent Trusts, to be held in trust for
that person under the provisions of the Contingent Trusts.
Article VI
TRUST ADMINISTRATION
Except as otherwise provided in this Agreement and only to the extent
not inconsistent with the qualification of the Grantor's and the Grantor's
Spouse's interests in this Trust as "qualified annuity interests" under Section
2702(b)(1) of the Code, the following provisions shall apply in connection with
the administration of each trust and the properties of each trust under this
Agreement:
A. Governing Law. Except as otherwise provided in this Agreement,
each trust shall be governed, construed, and administered under, and the
rights, powers, duties, and liabilities of the trustee shall be as provided
under, the Texas Trust Code and other laws of the State of Texas in effect at
any applicable time.
B. Standard for Management and Investment. The trustee shall manage
the trust properties and may invest and reinvest in property of any character,
upon such terms and conditions and for such lengths of time as the trustee
shall deem proper in its judgment and discretion, without any limitation upon
its power to do so and without being limited to investments authorized by law
or custom for the investment of trust properties.
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<PAGE> 7
C. Retention of Assets. The trustee may retain any property
transferred to the trustee under this Agreement or otherwise by a Grantor or
testator, whether or not a proper investment under law or custom, regardless of
the nature of that property and regardless of any requirement to diversify
investments, which requirement is negated as to that property.
D. Execution of Documents. The trustee is authorized to execute any
instrument or enter into any contract or undertake any other action necessary
or advisable in its judgment to exercise any power the trustee has or to manage
or use the trust properties in a businesslike manner.
E. Partitions. In connection with any distribution from a trust or
transfer between trusts or in any other instance when the trustee deems a
partition advisable, the trustee may partition trust properties in kind or in
money or both and may make such distribution or transfer accordingly. The
trustee may make distributions of principal, in accordance with the provisions
of this Agreement, consisting of undivided interests. The trustee may make any
partition or distribution on a non-pro rata basis so that the persons or
entities affected may receive different properties with federal income tax
bases not corresponding to the ratio of such partition or distribution (but
with fair market values so corresponding), and the trustee shall value such
properties as of the date of distribution.
F. Undivided Interests. The trustee may make and retain joint
investments and investments of undivided interests in any property. For
convenience in administration, the trustee may mingle any or all of the
properties of two or more separate trusts hereunder, by holding such properties
in one or more consolidated funds in which the separate trusts shall have
undivided interests.
G. Sale or Disposition of Trust Property. The trustee is
authorized, upon such terms and conditions as the trustee alone may determine,
to sell property, to exchange property, to lease property, to negotiate
instruments by any form of endorsement, to grant or take licenses, and to give
warranties and representations (which warranties and representations shall be
binding only with respect to the trust estate involved and not upon the trustee
or any beneficiary personally or corporately).
H. Investments. The trustee shall have full power and authority to
invest and reinvest the properties of a trust in any property (real, personal,
or mixed) including, without limitation, securities of domestic and foreign
corporations and investment trusts, bonds, preferred stocks, common stocks,
mortgage participations, interests in common trust funds, and real property,
regardless of diversification or other limitations imposed by law. The trustee
may purchase property on credit upon such terms and conditions as is advisable
in the judgment of the trustee for the advantageous administration of the
trust.
I. Real Property. The trustee may invest and reinvest in real
property; improve or develop real property; construct, alter, or repair
buildings or structures on real property; settle boundary lines; grant
easements and other rights of way; and dedicate or convey land for public
purposes.
J. Businesses. The trustee may engage in any business in any form;
commence, continue, terminate, or liquidate any business; form partnerships or
corporations with any persons or entities; subscribe for stock or other
securities; and contribute any property to any partnership or corporation for
an interest therein.
K. Stock Powers. The trustee may vote stock in person or by proxy;
exercise any right, privilege, or power with respect to stock; exercise stock
options; vote stock in favor of or against any merger, consolidation,
liquidation, reorganization, recapitalization, or refinancing; and hold stock
in any bank or trust company serving as a fiduciary hereunder or in any company
holding stock in such bank or trust company, and may purchase additional shares
of such stock.
L. Lending and Borrowing. The trustee is authorized to lend money,
with or without security, upon such terms and conditions and for such lengths
of time as the trustee alone may determine. The trustee may lend money to a
beneficiary of a trust hereunder. The trustee may borrow money from any source
(including the trustee) and in connection therewith, mortgage, pledge, or
otherwise encumber
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<PAGE> 8
any properties of a trust and may guarantee, indemnify, or otherwise obligate
(including by joint and several obligations) any property of a trust when the
trustee, in its discretion, determines that it is necessary or desirable to do
so in connection with the administration of or the carrying out of the purposes
of any trust under this Agreement.
M. Claims and Indebtedness. The trustee is authorized to abandon or
release any cause of action; to pay or satisfy any debt or claim upon evidence
deemed by the trustee to be sufficient; to extend the time of payment of any
bond, mortgage, or other obligation or of any installment thereof, to hold any
such obligation past maturity, and to consent to alteration of any terms of any
such obligation; and to foreclose any security interest.
N. Residence. The trustee may invest properties of a trust in a
residence or retain an interest in any residence held in a trust and permit any
current beneficiary of that trust and that beneficiary's guardian to occupy
that residence without charge for rent. While any residence held in a trust is
so occupied by a beneficiary, the trustee shall pay all insurance premiums,
property taxes and assessments, reasonable maintenance and repair costs, and
similar costs, out of the income or, if income is not sufficient, from the
principal of that trust.
O. Term of Transactions. The trustee is authorized to make the term
of any transaction or contract or other instrument extend beyond the term of
any trust involved and to continue to exercise each power after termination of
each trust until final distribution of the properties thereof.
P. Agents; Employees; Nominees. The trustee may employ attorneys,
accountants, agents, brokers, investment advisors, engineers, geologists, and
management firms whose services are reasonably necessary in the administration
of a trust. The trustee may delegate to agents and employees any matter
whether ministerial or discretionary and may act through such agents and
employees and may register and carry any property in its own name or in the
name of its nominee or hold it unregistered, but without thereby increasing or
decreasing its liability as a fiduciary.
Q. Expenses. The trustee is authorized before making any payment to
deduct all necessary and reasonable expenses incident to the administration of
each trust and the properties of each trust including any court costs and fees
of attorneys and other professional persons.
R. Reserves; Allocation of Receipts and Disbursements. The trustee
may establish reasonable reserves out of the yield from depreciable,
depletable, or other wasting properties. If the properties of a trust include
an interest in a partnership, only that share of partnership net income that
the partnership distributes to the trustee or that the trustee is entitled to
withdraw from the partnership shall be characterized as income for the purpose
of determining the income of the trust that is distributable to a beneficiary.
As used or applied in this paragraph, the term "net income" does not include
profits of a partnership that are in the nature of capital gains. In general,
in case of reasonable doubt as to the allocation of receipts or disbursements
between income and principal, the trustee may make such allocation as the
trustee in its sole discretion deems advisable, all without personal liability
to the trustee.
S. Out-of-State Properties. With respect to property situated
outside the State of Texas, the trustee may exercise any power granted to the
trustee by this Agreement or the Texas Trust Code or any other laws of the
State of Texas, each of which powers hereby expressly is granted to the trustee
with respect to property situated outside the State of Texas.
T. Successor Fiduciaries. The trustee shall not be obligated to
examine or seek alteration of any account of any executor, administrator, or
preceding trustee, nor shall the trustee be liable personally or corporately
for failing to do so or for any act or omission of any executor, administrator,
or preceding trustee. This paragraph, however, shall not prevent the trustee
or anyone else from taking any action otherwise permissible in connection with
any such account.
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<PAGE> 9
U. Limitation on Liability. The trustee in carrying out its powers
and performing its duties may act in its discretion and shall be personally or
corporately liable only for fraud or acts or omissions in bad faith.
V. Binding Effect. Any action the trustee takes in the exercise of
discretionary powers granted to the trustee in this Agreement shall be binding
upon the beneficiaries and all persons claiming from the beneficiaries.
W. Tax Elections. The trustee is authorized to make any election
under any tax law in the manner the trustee deems advisable, none of which
elections shall result in the trustee's personal or corporate liability.
Article VII
CONCERNING THE TRUSTEE
A. Succession of Trustees.
(1) Trusts under Article III. If Leo E. Whitson for any
reason should cease to serve as the trustee of any trust under this Agreement,
Donald E. Whitson thereafter shall serve as the trustee of that trust. If
Donald E. Whitson for any reason should fail or cease to serve as the trustee
of any trust under this Agreement, Jean W. Whitson thereafter shall serve as
the trustee of that trust. If Jean W. Whitson for any reason should fail or
cease to serve as the trustee of any trust under this Agreement, Melanie
Whitson Vaughn thereafter shall serve as the trustee of that trust.
(2) Contingent Trusts and Jean W. Whitson Trust. Jean W.
Whitson shall serve as the trustee of the Contingent Trusts and the Jean W.
Whitson Trust. If Jean W. Whitson for any reason should fail or cease to serve
as the trustee of any such trust, Raymond Grace thereafter shall serve as the
trustee of that trust.
(3) The Trustee Appointer. If the situation ever arises where
any trust has no trustee serving or to commence serving in accordance with
subparagraphs (1) or (2) of this paragraph, then in that event, the current
beneficiary or beneficiaries of such trust who have reached the age of majority
(acting together if there are two such beneficiaries or as a majority if there
are more than two such beneficiaries) (the "Trustee Appointer") shall designate
and appoint a successor trustee of that trust. The power to appoint a
successor trustee shall be exercised by filing a written, acknowledged
instrument in the deed records of Collin County, Texas, and delivering a copy
to the trustee being appointed. No action by any court shall be required with
respect to such appointment and this power may be exercised an unlimited number
of times. Under this power, the Trustee Appointor can appoint or provide for
successor trustees throughout the term of each such trust to the same extent
the Grantor could have done so in this Agreement. Specifically, and without
limitation, the Trustee Appointor can provide for co-trustees, a succession of
trustees, and compensation not in excess of fair and reasonable amounts. If
the situation ever arises where any trust has no trustee serving or to commence
serving in accordance with the preceding part of this subparagraph, the Trustee
Appointor may appoint another successor trustee of that trust in the manner
prescribed above in this paragraph.
B. Special Trustee. Notwithstanding any other provisions of this
Agreement, if the trust assets consist of any shares of stock of a controlled
corporation as described in Section 2036(b) of the Code and if the Grantor is
acting as trustee, Donald E. Whitson (or if Donald E. Whitson for any reason
should fail or cease to serve, Raymond Grace) shall serve as the "Special
Trustee." The Special Trustee shall exercise sole and complete control over
the right to vote any shares of stock of a controlled corporation as described
in Section 2036(b) of the Code that are part of the trust assets.
C. Bond and Compensation. No bond or other security shall be
required of the trustee. No individual shall receive any compensation for
services as trustee. Any bank or trust company serving as
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<PAGE> 10
trustee shall be paid a fair, reasonable, and customary fee commensurate with
services rendered. Each trustee shall receive reimbursement for reasonable
expenses incurred in performing those services.
D. Resignation. Any trustee may resign at any time by filing a
written, acknowledged instrument in the deed records of Collin County, Texas,
which filing immediately shall deprive such trustee of all powers as trustee
hereunder. No person dealing with any trustee is obligated to examine such
deed records, and any person shall be protected in all transactions with the
trustee whether or not any such resignation has taken place.
E. Self-Dealing. The trustee shall not be prohibited in any way in
exercising its powers from making contracts or having dealings with itself as
executor or trustee with respect to any estate or trust created by the Grantor,
the Grantor's intent being to allow the management of such properties to be
carried on for the best interests of each trust or estate without there being
applied rules prohibiting a fiduciary from contracting or dealing with itself
as a fiduciary of other properties.
F. Annual Report. Within a reasonable period of time after the end
of the fiscal year of each trust, the trustee shall prepare an annual report
for that trust, which shall include a statement of property on hand at the end
of the year, receipts and disbursements during the year, sales and purchases
made during the year, and other information necessary to show the condition of
the trust. The trustee shall deliver a copy of the annual report to each
beneficiary who, in the discretion of the trustee, could have received income
from that trust during the fiscal year covered by the report. If any such
beneficiary is a minor, the trustee also shall deliver a copy of the annual
report to the beneficiary's natural or legal guardian.
G. Definition. As used or applied in this Agreement with respect to
each trust, the term "trustee" refers to the one serving at any particular time
as the trustee of that trust.
H. Trustee's Support Obligation. Notwithstanding any other
provision of this Agreement, no person serving as trustee shall have the power
or authority to distribute income or principal of a trust in a manner that
would discharge such person's legal obligation to support a beneficiary of the
trust.
Article VIII
IRREVOCABILITY OF TRUST
Except as specifically provided in paragraph D(2) of Article III, this
Agreement is irrevocable and may not be amended by the Grantor. The trustee
acting alone shall amend the terms of this Agreement and restrict or remove any
of the powers, duties, rights, and privileges of the trustee, the
beneficiaries, or any other person in any manner required for the sole purpose
of ensuring that the interests of the Grantor and the Grantor's Spouse qualify
and continue to qualify as "qualified annuity interests" within the meaning of
Section 2702(b)(1) of the Code. Notice of any amendment or other change in the
Agreement shall be given by the trustee to each adult beneficiary and the
parent or guardian (or other appropriate representative designated by the
court) of each minor beneficiary.
Article IX
DECLARATIONS AND DEFINITIONS
The following provisions shall apply to each of the preceding Articles,
unless expressly provided otherwise:
A. Gender and Plurals. Where appropriate, the use of any gender
includes the other genders, and the use of either the singular or plural
includes the other.
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<PAGE> 11
B. Common Disaster. If the Grantor and the Grantor's Spouse die
simultaneously under circumstances where there is no sufficient evidence to
determine the order of their deaths, the Grantor shall be deemed to have
survived the Grantor's Spouse.
C. Notices. A notice must be in writing, signed by the person
giving notice, and shall be effective when delivered or mailed (by regular
mail) to the party to whom notice is to be given
D. Powers of Appointment. The donee of a power of appointment under
this Agreement may appoint properties outright or in trust, select the
trustees, create new powers of appointment in others, impose conditions on such
new powers of appointment, establish administrative powers, impose spendthrift
provisions, and in general appoint by deed or by Will in any lawful manner. A
power of appointment exercisable by Will shall be exercisable only by an
instrument duly admitted to probate as a Will or codicil of the donee of that
power. A power of appointment exercisable by deed shall be exercisable only by
a written, acknowledged instrument, other than a Will, executed by the donee of
the power and delivered to the trustee during the donee's lifetime. Any such
instrument shall be ineffective unless it expressly exercises such power and
specifically refers to such power. No exercise of any power of appointment,
whether created under this Agreement or subsequently created under the exercise
of any power derived therefrom, shall be exercised or exercisable so as to
postpone the vesting of any estate or interest in property subject thereto or
to suspend the absolute ownership or power of alienation of such property,
beyond the expiration of twenty-one years after the death of the last survivor
of the Grantor, the Grantor's Spouse, and the Grantor's lineal descendants in
being at the date of this Agreement. After the death of the donee of a power
of appointment exercisable by Will, the trustee may act in reliance upon a
court order in any jurisdiction admitting an instrument to probate as the Will
or codicil of the donee of the power or finding that such donee died intestate
and may assume such donee died intestate if the trustee has no actual notice of
the existence of a Will or of probate proceedings concerning the donee's estate
within three months after such donee's death.
E. Separate Property. Any property, including income, held for or
paid to a beneficiary under this Agreement shall be owned by the beneficiary
(beneficially, when held for the beneficiary) as separate property and not as
community property, the Grantor' intent being that all property transferred
under this Agreement, as well as all income from such property, is a gift from
the Grantor.
F. Children and Lineal Descendants. References to "child" and
"children" mean a descendant or descendants in the first degree of the parent
designated. References to "lineal descendants" mean descendants in any degree
of the ancestor designated. As used in this Agreement, those terms shall
include (i) a child born of a lawful marriage and (ii) a person deemed a child
for the purposes of inheritance under Section 42 of the Texas Probate Code, as
amended (other than a child adjudicated to be the child of a father by court
decree). A child in gestation at the applicable time who is later born alive
shall be considered a child in being at the applicable time. For purposes of
this Agreement, a child adopted by judicial proceedings and that adopted
child's lineal descendants (whether by blood or adoption by judicial
proceedings) shall be considered lineal descendants of each adopting parent of
that child and shall be considered lineal descendants of anyone who is by
blood or adoption an ancestor of that adopting parent. Notwithstanding
anything in this Agreement to the contrary, (i) the terms "child", "children",
and "lineal descendants" shall not include any person adopted by judicial
proceedings who is at the time of adoption eighteen (18) years of age or older
and (ii) the term "lineal descendants" shall not include any lineal descendant
of any such adopted person.
G. Per Stirpes. A provision for property to pass to the lineal
descendants of a designated person, per stirpes, means that the property shall
pass equally to that person's children living at the applicable time or all to
that person's child if only one is then living; provided that if any child of
that person is not then living but has lineal descendants then living, the
property which would have passed to that deceased child if he were then living
shall pass instead to his lineal descendants then living, per stirpes; provided
further that in determining the class comprised of such lineal descendants, no
lineal descendants of a living person included in that class shall be included
therein.
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<PAGE> 12
H. The Code. As applied under this Agreement, unless otherwise
required by the context, a reference to a provision of the "Code" is to that
provision of the United States Internal Revenue Code of 1986 as then applicable
and to the corresponding provision of any subsequent federal tax law.
I. Titles and Headings. Titles of Articles and headings of
paragraphs hereof are for administrative purposes only and do not constitute
matter to be used in construing this Agreement.
Article X
ACCEPTANCE
By joining in the execution of this Agreement, the trustee indicates its
willingness to act as trustee of the trusts created under this Agreement.
This Agreement is executed as of the day and year first above written.
-----------------------------------
Leo E. Whitson, Grantor
-----------------------------------
Leo E. Whitson, Trustee
STATE OF TEXAS )
COUNTY OF COLLIN )
This instrument was acknowledged before me on the ______ day of
________________________, 1996, by Leo E. Whitson.
-----------------------------------
Notary Public, State of Texas
My Commission Expires:
-----------------------------------
- ------------------------- Printed Name of Notary
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<PAGE> 13
EXHIBIT A
77,611 shares of common stock of Span Instruments, Inc.
<PAGE> 1
EXHIBIT 99C
AGREEMENT AND PLAN OF REORGANIZATION
AMONG
TYLAN GENERAL, INC.
TYLAN GENERAL ACQUISITION SUBSIDIARY, INC.
SPAN INSTRUMENTS, INC.
AND
SHAREHOLDERS OF SPAN INSTRUMENTS, INC.
JULY 2, 1996
<PAGE> 2
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
July , 1996 by and among TYLAN GENERAL, INC., a Delaware corporation ("Tylan
General"), TYLAN GENERAL ACQUISITION SUBSIDIARY, INC., a Delaware corporation
("Tylan General Sub"), SPAN INSTRUMENTS, INC., a Texas corporation ("Span"), and
all the shareholders of Span (each a "Shareholder" and collectively the
"Shareholders").
RECITALS
A. Tylan General has formed Tylan General Sub as a wholly owned subsidiary
to effect the merger of Tylan General Sub with and into Span (the "Merger") in
accordance with the laws of the State of Texas and the State of Delaware and in
accordance with this Agreement, so that upon consummation of the Merger, Tylan
General Sub will cease to exist and Span will become a wholly owned subsidiary
of Tylan General.
B. This Agreement has been approved by the Boards of Directors of Tylan
General, Tylan General Sub and Span, and by Tylan General in its capacity as the
sole shareholder of Tylan General Sub; and
C. The Merger is intended to qualify as a reorganization within the
meaning of the provisions of Section 368 of the Internal Revenue Code of 1986,
as amended (the "Code") and to be accounted for as a pooling-of-interests.
AGREEMENT
NOW, THEREFORE, in consideration of their mutual covenants, promises and
obligations contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be bound hereby, agree as follows:
1. DESCRIPTION OF TRANSACTION
1.1 Merger of Tylan General Sub Into Span. Subject to the terms and
conditions of this Agreement, Tylan General Sub shall be merged with and into
Span and the separate existence of Tylan General Sub shall cease. Span shall be
the surviving corporation in the Merger under the corporate name it possesses
immediately prior to the Merger, and Tylan General shall own all of the issued
and outstanding shares of capital stock of Span. Span, in its capacity as the
corporation surviving the Merger, is sometimes referred to herein as the
"Surviving Corporation."
1.2 Effect of the Merger. The Merger shall have the effects set forth in
the Texas Business Corporation Act (the "Texas Law") and the Delaware General
Corporation Law ("DGCL"). Without limiting the generality of the foregoing, the
Surviving Corporation shall possess all the rights, privileges, powers and
franchises of a public as well as a private nature, and be subject to all the
restrictions, disabilities and duties, of each of Tylan General Sub and Span
(collectively, the "Constituent Corporations"). The Surviving Corporation shall
be vested with the rights, privileges, powers and franchises, all property
(real, personal, and mixed) and all debts due on whatever account and all other
things in action or belonging to, and all and every other interest of, each of
the Constituent Corporations. All debts, liabilities and duties of each of the
Constituent Corporations shall attach to the Surviving Corporation and may be
enforced against it to the same extent as if such debts, liabilities and duties
had been incurred or contracted by it.
1.3 Closing. Consummation of the transactions contemplated by this
Agreement (the "Closing") will take place at such place, time and date as Tylan
General and Span may mutually select (the "Closing Date"), which shall be as
soon as practicable following satisfaction or waiver of the closing conditions
contained in Articles 6 and 7 hereof, but in any event not later than September
30, 1996. At the Closing, Tylan General Sub and Span will each carry out the
procedures specified under the applicable provisions of the Texas Law and DGCL,
including duly executing and filing Articles of Merger with the Texas Secretary
of State (the "Texas Articles of Merger") and a Certificate of Merger with the
Delaware Secretary of State (the "Delaware Certificate of Merger") to the end
that the Merger shall become effective. The Merger shall become effective
1
<PAGE> 3
on the last to occur of (a) the date the Texas Articles of Merger is duly filed
with the Texas Secretary of State (b) the date the Delaware Certificate of
Merger is duly filed with the Delaware Secretary of State or (c) such later date
as may be specified in the Texas Articles of Merger and Delaware Certificate of
Merger (the "Effective Date").
1.4 Exchange of Span Stock.
(a) On the Effective Date, each then outstanding share, no par value,
of Span (collectively, the "Span Common Shares"), other than Span Common
Shares to be canceled pursuant to Section 1.4(b) and Dissenting Shares (as
defined in Section 1.14), shall cease to be an existing and issued Span
Common Share and shall become and be converted into, by virtue of the
Merger and without any action on the part of Tylan General, Tylan General
Sub, Span or the holder thereof, into that number of duly authorized,
validly issued, fully paid and nonassessable shares of common stock, $.001
par value, of Tylan General (the "Tylan General Common Stock") equal to
1,300,000 divided by the Fully Diluted Span Common Shares Outstanding, as
defined in Section 2.1(c) (the "Common Exchange Ratio").
(b) Each Span Common Share issued and outstanding immediately prior to
the Effective Date owned by Tylan General, Tylan General Sub or any
subsidiary thereof shall automatically be canceled at the Effective Date,
and no conversion shall be made in respect thereof.
1.5 Conversion of Tylan General Sub Common Stock. Each share of Tylan
General Sub's common stock issued and outstanding immediately prior to the
Effective Date shall automatically be converted into and become one validly
issued, fully paid and nonassessable share of Common Stock of the Surviving
Corporation and the aggregate of such shares issuable upon such conversion shall
constitute the only outstanding capital shares of the Surviving Corporation.
1.6 Closing of Company Transfer Books. On and after the Effective Date,
holders of certificates representing Span Common Shares shall cease to have any
rights as shareholders of Span (except rights, if any, under Article 5.11 of the
Texas Law) and the share transfer books of Span shall be closed with respect to
Span Common Shares issued and outstanding immediately prior to the Effective
Date, and no further transfer of such shares shall thereafter be made on such
share transfer books. If, after the Effective Date, valid certificates
previously representing such shares are presented to the Surviving Corporation
they shall be exchanged as provided in Section 1.7.
1.7 Exchange of Certificates. The parties anticipate that all Span Common
Share certificates (except certificates representing canceled shares) shall be
exchanged for Tylan General Common Stock certificates (and cash in lieu of any
fractional shares) at the Closing. Any certificates for Span Common Shares not
so surrendered and exchanged at the Closing shall represent solely the right to
receive the shares of Tylan General Common Stock into which the Span Common
Shares it theretofore represented shall have been converted pursuant to Section
1.4 (or to perfect the holder thereof's right to receive payment for such shares
pursuant to Article 5.12 of the Texas Law and Section 1.14 hereof); provided,
however, that customary and appropriate certifications and indemnities (but
without the requirement to post a bond) allowing exchange against lost or
destroyed certificates shall be provided; and provided further that nothing in
this Section 1.7 shall require Tylan General to exchange Tylan General Common
Stock to any holder of Span Common Shares who shall fail to surrender a
certificate representing such shares or the certification and indemnities
relating to a lost certificate.
1.8 No Fractional Shares. No fractional shares of Tylan General Common
Stock will be issued in connection with the Merger and no certificate therefor
will be issued. In lieu of such fractional shares, any holder of Span Common
Shares who would otherwise receive a fractional share of Tylan General Common
Stock shall, upon surrender of his certificate or certificates representing Span
Common Shares, be paid an amount in cash (without interest) determined by
multiplying such fraction by the closing price of Tylan General Common Stock as
reported on the NASDAQ National Market System on the last trading date
immediately preceding the Closing Date. Tylan General will, subject to any
applicable statute of limitation or abandoned property or similar law, pay to
such holders, upon surrender of their certificates representing Span
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Common Shares outstanding immediately prior to the Effective Date, the cash
value of such fractions so determined, without interest.
1.9 Adjustment of Common Exchange Ratio. If, between the date of this
Agreement and the Effective Date, the outstanding Tylan General Common Stock
shall have been changed into a greater or lesser number of shares of Tylan
General Common Stock or into a different security by reason of a
reclassification, stock split, stock combination, stock dividend or other
recapitalization or similar transaction, the Common Exchange Ratio shall be
correspondingly adjusted.
1.10 Accounting Treatment. The parties intend that the Merger will be
treated as a pooling-of-interests for accounting purposes.
1.11 Tax Consequences. For federal income tax purposes, the Merger is
intended to constitute a reorganization within the meaning of Section
368(a)(2)(E) of the Code.
1.12 Stock Subject to Conditions or Forfeiture. All shares of Tylan
General Common Stock which are received in the Merger in exchange for Span
Common Shares which, under applicable stock purchase or restriction agreements,
as amended, with Span, are unvested or subject to a repurchase option or other
condition of forfeiture which by its terms does not terminate due to the Merger,
will also be unvested or subject to the same repurchase option or other
condition, as the case may be, and the certificates evidencing such shares will
be marked with appropriate legends; provided, however, that this Section 1.12
shall not preclude modification of the existing agreements between Span and its
shareholders consistent with pooling-of-interests accounting.
1.13 Further Action. If at any time after the Effective Date any further
action is necessary or desirable to carry out the purposes of this Agreement or
to vest the Surviving Corporation with the full right, title and possession to
all assets, property, rights, privileges, immunities, powers and franchises of
either or both of the Constituent Corporations, the officers and directors of
the Surviving Corporation are fully authorized in the name of either or both of
the Constituent Corporations or otherwise to take all such action at Tylan
General's expense.
1.14 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Span Common Shares that are issued and outstanding immediately prior
to the Effective Date and that are held by shareholders who have not voted such
shares in favor of the Merger and who have delivered a written notice of
intention to demand payment for such shares in the manner provided in Article
5.12 of the Texas Law ("Dissenting Shares") shall not be canceled and converted
into shares of Tylan General Common Stock in accordance with the provisions of
Section 1.4(a) unless and until such holder shall have failed to perfect, or
shall have effectively withdrawn or lost, such holder's right to payment under
the Texas Law. If such holder shall have so failed to perfect, or shall have
effectively withdrawn or lost such right, such holder's Span Common Shares shall
thereupon be deemed to have been canceled and converted as described in Section
1.4 at the Effective Date, and each such share shall represent solely the right
to receive shares of Tylan General Common Stock in accordance with the
provisions of Section 1.4(a). Span shall give Tylan General prompt notice of any
demands received by Span for purchase of its shares, and, prior to the Effective
Date, Tylan General shall have the right to participate in all negotiations and
proceedings with respect to such demands. Prior to the Effective Date, Span
shall not, except with the prior written consent of Tylan General, make any
payment with respect to, or settle or offer to settle, any such demands. From
and after the Effective Date, no shareholder who has exercised dissenters'
rights as provided in Article 5.12 of the Texas Law shall be entitled to vote
such holder's shares for any purpose or to receive payment of dividends or other
distributions with respect to such holder's shares (except dividends and other
distributions payable to shareholders of record at a date which is prior to the
Effective Date).
1.15 Shareholders' Agreements.
(a) At or prior to Closing, each of the Shareholders shall execute the
Continuity of Interest Certificate referred to in Section 4.2(h) and the
Investment Letter referred to in Section 4.2(p).
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(b) At or prior to Closing, Don E. Whitson, Leo E. Whitson, Robert
Barraclough, Robert Lipsky, John Rabbitt, George Yurch, John Jul, John
Jordon, Brian Day, Tom Gray and Ron Ewers (the "Affiliates") shall execute
the Affiliate Agreement referred to in Section 4.2(o).
2. REPRESENTATIONS AND WARRANTIES OF SPAN AND THE PRINCIPAL SHAREHOLDERS
Span and each of Don E. Whitson and Leo E. Whitson (each a "Principal
Shareholder" and, collectively, the "Principal Shareholders") jointly and
severally represent and warrant to Tylan General and Tylan General Sub as of the
date of this Agreement as follows:
2.1 Organization.
(a) Each of Span and Ocala, Inc. ("Ocala") is a corporation duly
organized, validly existing and in good standing, under the laws of the
State of Texas. Each of Span and Ocala has all necessary power and
authority under applicable corporate law and its Articles of Incorporation
and Bylaws to own or lease its properties and to carry on its business as
presently conducted. Span has provided Tylan General with true and correct
copies of the Articles of Incorporation and Bylaws of each of Span and
Ocala. Except for Ocala, Span has no subsidiaries, and, except as set forth
on Schedule 2.1(a), Span does not own or hold, directly or indirectly, any
debt or equity securities of, nor has any other interest in, any
corporation, partnership, joint venture or other entity.
(b) Each of Span and Ocala is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all jurisdictions
where the nature of its business requires such qualification and where the
failure to so qualify would have a "Material Adverse Effect." For the
purposes of this Agreement, "Material Adverse Effect" as it applies to Span
or Tylan General means an adverse effect on the business, operations,
condition (financial or otherwise), assets or prospects of Span and Ocala,
taken as a whole, or Tylan General and its subsidiaries, taken as a whole,
respectively, which is material. For purposes of this Agreement, documents,
objects, effects, conditions, events or occurrences shall be deemed
"material" as they relate to Span or Ocala if they involve amounts, or
result in Damages (as hereinafter defined), in excess of $50,000 during any
fiscal year period. For purposes of this Agreement, documents, objects,
effects, conditions, events or occurrences shall be deemed "material" as
they relate to Tylan General if upon public disclosure, they would be
viewed by a reasonable investor as significantly altering the total mix of
information then available concerning Tylan General and its subsidiaries,
taken as a whole.
(c) The authorized capital stock of Span consists, and on the Closing
Date will consist, of 500,000 shares, no par value, of which 265,699 shares
are issued and outstanding. The authorized capital stock of Ocala consists,
and on the Closing Date will consist, of 1,000,000 shares, $0.01 par value
per share, of Common Stock, of which 100,000 shares are issued and
outstanding. All of the issued and outstanding shares of Span and Ocala are
validly issued, fully paid and nonassessable and the issuance of such
issued and outstanding shares were not subject to any preemptive rights
which have not been effectively waived. Schedule 2.1(c) sets forth a list
of the Shareholders and the holders of all outstanding shares of capital
stock of Ocala, including their names and addresses and the kind and number
of shares of Span capital stock and Ocala capital stock that they hold. No
holder of Span capital stock or Ocala capital stock possesses shares that
are subject to vesting. Except as set forth above, there are not as of the
date hereof, and on the Closing Date there will not be, any capital shares
of Span or Ocala authorized, issued or outstanding or any authorized or
outstanding subscriptions, options, warrants, stock appreciation rights,
calls, rights, convertible securities or other agreements or commitments of
any character relating to issued or unissued capital shares or other
securities of Span or Ocala, or otherwise obligating Span or Ocala to
issue, transfer or sell any capital shares of Span or Ocala, or other
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any capital shares of Span or Ocala. The sum of the number
of Span Common Shares outstanding and the maximum number of Span Common
Shares issuable upon exercise, conversion, exchanging or subscription
pursuant to any security agreement or commitment of Span immediately before
the Effective Date shall be referred to herein as the "Fully Diluted Span
Common Shares Outstanding." Following the Closing, neither Span nor Ocala
will have
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any obligation to issue, transfer or sell any of its capital shares or
other securities of Span or Ocala pursuant to any currently existing
employee benefit plan or otherwise. Except as set forth on Schedule 2.1(c),
neither Span nor Ocala has any liability to any current or former
shareholder of Span or Ocala arising from or relating to the offer and sale
of any of its securities, whether under federal or state securities law, or
otherwise.
(d) Span has full corporate power and authority to execute, deliver
and perform this Agreement. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
and validly authorized by the Board of Directors of Span, and no other
corporate proceedings on the part of Span are necessary for Span to
authorize this Agreement or to consummate the transactions contemplated
hereby (other than approval by the Shareholders). This Agreement has been
duly executed and delivered by duly authorized officers of Span. This
Agreement constitutes a legal, valid and binding obligation of Span and the
Shareholders enforceable against them in accordance with its terms (except
to the extent that enforcement is affected by laws pertaining to
bankruptcy, reorganization, insolvency and creditors' rights and by the
availability of injunctive relief, specific performance and other equitable
remedies).
(e) Except as may be required by the Securities Act of 1933, as
amended (the "Securities Act"), state securities laws, the Texas Law or the
DGCL, there is no requirement applicable to Span or Ocala to make any
filing with, or to obtain any permit, authorization, consent or approval
of, any governmental or regulatory authority as a condition to the lawful
consummation by Span of the transactions contemplated by this Agreement.
Neither Span nor either of the Principal Shareholders knows of any reason
why any required permit, authorization, consent or approval will not be
obtained. Except as set forth on Schedule 2.1(e), neither the execution and
delivery of this Agreement by Span nor the consummation by Span of the
transactions contemplated by this Agreement will (i) conflict with or
result in any breach of any provision of the Articles of Incorporation or
Bylaws of Span or Ocala, (ii) result in a material default (or give rise to
any right of termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, mortgage, indenture or
other evidence of indebtedness of Span or Ocala or any material license
agreement, lease or other material contract, instrument or obligation to
which Span or Ocala is a party or by which Span or Ocala or any of either
of their assets may be bound, (iii) violate any statute, rule, regulation,
order, writ, injunction, decree or arbitration award applicable to Span or
Ocala or any of either of their assets, which violation would have a
Material Adverse Effect on Span, or (iv) result in the creation of any
material (individually or in the aggregate) liens, charges or encumbrances
on any of the assets of Span or Ocala.
(f) Span has delivered to Tylan General complete and accurate copies
of the minutes of all its directors and shareholders meetings, and all
actions by written consent of the directors and shareholders, of Span and
Ocala since January 1, 1990 as to Span and since inception as to Ocala, and
will deliver to Tylan General at or prior to the Closing complete and
accurate copies of all minutes of such meetings and such actions that occur
between the date hereof and the Closing Date.
2.2 Financial.
(a) The audited consolidated balance sheet of Span as of February 29,
1996 and the audited consolidated statement of operations, consolidated
statement of cash flows and consolidated statement of changes in
shareholders' equity of Span for the six months ended February 29, 1996
(the "Audited Financial Statements"), each certified by Ernst & Young LLP,
independent certified public accountants, whose report thereon is included
therein, and the unaudited consolidated balance sheet of Span as of April
30, 1996 (the "April 30, 1996 Balance Sheet") and the unaudited
consolidated statement of operations and consolidated statement of cash
flows of Span for the six-month period ending April 30, 1996 have been
prepared in accordance with the books and records of Span, which books and
records are complete, maintained on a consistent basis, and correctly
reflect its income, expenses, assets and liabilities, are true, complete
and accurate and present fairly the financial position of Span as of the
date of said balance sheets and the results of operations of Span for the
periods covered by said statements of operations, in accordance with
generally accepted accounting principles ("GAAP") consistently applied,
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except as otherwise disclosed therein and except, in the case of unaudited
statements, for normally recurring year-end adjustments, which adjustments
will not be material either individually or in the aggregate, and the
absence of notes required by GAAP. The financial statements described in
this Section 2.2(a) are referred to in this Agreement as the "Financial
Statements."
(b) Except as disclosed in Schedule 2.2(b), neither Span nor Ocala has
any material Liability, except for any Liability which (i) is accrued or
fully reserved against in the April 30, 1996 Balance Sheet or disclosed in
the notes included in the Audited Financial Statements; or (ii) is of a
normally recurring nature and was incurred after April 30, 1996 in the
ordinary course of business consistent with past practice. As used herein,
"Liabilities" shall mean any liability or obligation of any kind or nature,
secured or unsecured (whether absolute, accrued, contingent or otherwise,
and whether due or to become due).
(c) The accounts receivable of Span on April 30, 1996, and those
existing on the Closing Date:
(i) will have arisen out of sales in the ordinary course of
business and represent bona fide indebtedness of the applicable account
debtor;
(ii) to the best knowledge of Span and each of the Principal
Shareholders, are and will be collectible in full (except as set forth
on Schedule 2.2(c)), net of the reserves therefore set forth on the
books of Span, which reserves were calculated consistent with past
practices and with GAAP applied consistently with the Audited Financial
Statements; and
(iii) except as set forth on Schedule 2.2(c), are subject to no
claim of offset, counterclaim, recoupment or setoff and, to the best
knowledge of Span and each of the Principal Shareholders, there are no
facts or circumstances (whether asserted or unasserted) that could give
rise to such a claim.
Schedule 2.2(c) sets forth complete and accurate accounts receivable
aging report as of April 30, 1996. Span will use all reasonable efforts to
ensure that the aging of the accounts receivable on the Closing Date shall
not be materially worse than that shown on Schedule 2.2(c).
(d) Other than as set forth on Schedule 2.2(d), the inventories of
Span on April 30, 1996 and those existing on the Closing Date are and will
be usable in all material respects in the ordinary course of business at a
value which is not less than the value at which such inventory is carried
on the books of Span. The inventory is adequate for the conduct of the
business of Span and inventory levels are not in excess of the normal
operating requirements of Span. Schedule 2.2(d) sets forth all inventories
as of the date hereof that Span in good faith believes to be in excess of
the reasonable requirements of Span for the next six months.
2.3 Tax Matters. With respect to Taxes (as defined below):
(a) Except as set forth on Schedule 2.3, Span and Ocala have filed or
will file or cause to be filed, within the time and in the manner
prescribed by law, all material returns, declarations, reports, estimates,
information returns and statements, including information returns and
reports ("Returns") required to be filed under federal, state, local or any
foreign laws by Span or Ocala for all taxable periods ending on or prior to
the Closing Date; all Returns so filed complied in all material respects
with the laws, rules and regulations applicable to such Returns.
(b) Except as set forth on Schedule 2.3, Span and Ocala have within
the time and in the manner prescribed by law, paid (and until the Closing
will, within the time and in the manner prescribed by law, pay) all Taxes
(as defined below) that are due and payable prior to the Closing, and there
is (and until the Closing shall be) no material difference between the
amount of the book basis and the tax basis of assets (net of liabilities)
that are not accounted for by an accrual on the books for federal income
tax purposes.
(c) All Taxes payable by Span or Ocala as of April 30, 1996 or which
will become payable as a result of activities of Span or Ocala on or before
April 30, 1996 are clearly identified and reflected on the April 30, 1996
Balance Sheet as taxes payable or as accrued taxes. No Taxes will become
payable by
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Span or Ocala as a result of activities of Span or Ocala between April 30,
1996 and the Closing Date other than Taxes of a normally recurring nature
incurred by Span or Ocala after April 30, 1996 in the ordinary course of
business consistent with past practice.
(d) Span has established (and until the Closing will establish) on its
books and records reserves that are adequate for the payment of all Taxes
not yet due and payable.
(e) There are no liens for unpaid Taxes filed against the assets of
Span or Ocala except liens for Taxes not yet due.
(f) Neither Span nor Ocala has filed (nor will file prior to the
Closing Date) any consent agreement under Section 341(f) of the Code nor
agreed to have Section 341(f)(2) of the Code apply to any disposition of
the subsection (f) asset (as such term is defined in Section 341(f)(4) of
the Code) owned by Span or Ocala.
(g) Except as set forth on Schedule 2.3(g), no deficiency or
adjustment for any Taxes has been proposed or asserted or assessed against
Span or Ocala and, to the best knowledge of Span and each of the Principal
Shareholders, no foreign, federal, state or local audits, examination or
other administrative proceedings or court proceedings are presently pending
with regard to any Taxes, and no waiver or consent extending any statute of
limitations for the assessment or collection of any Taxes, which waiver or
consent remains in effect, has been executed by (or on behalf of) Span or
Ocala nor are any requests for such waiver or consent pending. The federal
income tax returns of Span and Ocala have been examined by the Internal
Revenue Service (the "IRS") or the statutes of limitations for the
assessment of federal income taxes has expired for all periods to and
including August 31, 1991.
(h) Neither Span nor Ocala is a party to any tax-sharing or allocation
agreement, nor does Span or Ocala owe any amount under any tax-sharing or
allocation agreement.
(i) The acquisition of Span by Tylan General will not result in the
payment of any "excess parachute payment" within the meaning of Section
280G of the Code and there is no agreement, plan or arrangement covering
any employee or independent contractor of Span or Ocala that would give
rise to any payment that would not be deductible pursuant to Section 280G
or Section 162 of the Code.
(j) Neither Span nor Ocala has made any election under Section 338(g)
of the Code with respect to any acquisition and no outstanding debt
obligation of Span or Ocala is "corporate acquisition indebtedness" within
the meaning of Section 279(b) of the Code.
(k) Neither Span nor Ocala is a United States Real Property Holding
Corporation as defined under Section 897(c)(2) of the Code.
(l) There have been no audits of Taxes based on income of Span or
Ocala since August 31, 1991.
(m) For purposes of this Agreement, "Taxes" shall mean all taxes,
charges, fees, levies, or other assessments of whatever kind or nature,
including, without limitation, all net income, gross income, gross
receipts, sales, use, value-added, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise, estimated,
severance, stamp, net worth, environmental, occupancy or property taxes,
customs duties, fees, assessments or charges of any kind whatsoever
(together with any interest and any penalties, additions to tax or
additional amounts) imposed by any taxing authority (domestic or foreign)
upon or payable by Span or Ocala.
2.4 Conduct of Business. Except as set forth in Schedule 2.4, since
February 29, 1996, neither Span nor Ocala has:
(a) sold, leased, optioned or transferred any material portion of the
assets of Span or Ocala or any material portion of the interests in such
portion, except for sales of inventory in the ordinary course of business;
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(b) suffered any material loss, or material interruption in use, of
any material asset or property (whether or not covered by insurance), on
account of fire, flood, riot, strike or other hazard or Act of God;
(c) made any material change in the conduct or nature of its business
or operations;
(d) waived any material rights arising out of the conduct of, or with
respect to, its business or operations;
(e) made or committed to make any capital expenditures in an amount in
excess of $1,500,000 in the aggregate;
(f) declared or paid any dividend or other distribution with respect
to its capital shares or redeemed, repurchased or otherwise acquired any of
its own capital shares;
(g) made any material increase in the rate or terms of compensation
payable by Span or Ocala to, or any increase in the rate or terms of any
bonus, insurance, pension or other employee benefit plan on behalf of any
director, officer or key employee of Span or Ocala;
(h) made any change in accounting methods, principles or practices
except as required by GAAP;
(i) suffered any creation, occurrence or assumption of any material
indebtedness for money borrowed other than in the form of accounts payable
for goods and services in the ordinary course of business;
(j) assumed, guaranteed, or incurred any liability for the obligations
of any other person or suffered the subjecting of any property or assets of
Span or Ocala to mortgage, lien, pledge or other encumbrance other than
purchase money security interests or liens for taxes not yet due and
payable in the ordinary course of business;
(k) suffered any termination or threatened termination, or substantial
adverse modification, of the relationship of Span or Ocala with a customer
or supplier or the occurrence of any event affecting any product or process
used by Span or Ocala having, in any such case or in the aggregate, a
Material Adverse Effect;
(l) without limitation by the enumeration of any of the foregoing,
entered into any material transaction (including any borrowing, leasing or
capital financing or any lease of real property) other than in the ordinary
course of business;
(m) incurred any material Liabilities other than in the ordinary
course of business;
(n) suffered or been threatened with any adverse change which has had
or could have a Material Adverse Effect; or
(o) agreed to do any of the foregoing.
2.5 Contracts.
(a) Except as set forth in Schedule 2.5(a), neither Span nor Ocala is
a party to, or bound by, any material undischarged written or oral:
(i) contract for the employment for any period of time whatsoever,
or restricting the employment, of any employee;
(ii) consulting agreement;
(iii) collective bargaining agreement;
(iv) contract or agreement restricting in any manner Span's or
Ocala's right to compete with any other person or restricting Span's or
Ocala's right to sell to or purchase from any other person;
(v) agreement with any affiliate of Span or Ocala or person
controlled by an affiliate of Span or Ocala for or with respect to the
purchase or sale of goods or the performance of services;
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(vi) contract for the payment or receipt of license fees or
royalties to or from any person, firm or corporation;
(vii) contract of agency, representation, distribution or franchise
which cannot be canceled without payment or penalty upon notice of
thirty (30) days or less;
(viii) service contract in an annual amount in excess of $50,000;
(ix) guaranty, performance, bid or completion bond, or surety or
indemnification agreement;
(x) contract relating to the purchase, sale, ownership, use or
license of technology except licenses for third party software generally
available to the public;
(xi) lease or sublease, either as lessee or sublessee, lessor or
sublessor, of real or personal property or intangibles;
(xii) contracts relating to the purchase, sale or margining of
securities;
(xiii) warranty or product service contracts;
(xiv) joint venture, partnership or other contracts involving a
sharing of profits, losses, costs or liabilities; or
(xv) contract not listed above.
All material contracts, leases, subleases and other instruments of the
type referred to in this Section 2.5(a) and described in Schedule 2.5(a)
(collectively, "Contracts") are in full force and effect and are binding
upon Span or Ocala, as the case may be, and, to the best knowledge of Span
and each of the Principal Shareholders, are binding on the other parties
thereto. Except as set forth on Schedule 2.5(a), no material default by
Span or Ocala, as the case may be, has occurred thereunder and, to the best
knowledge of Span and each of the Principal Shareholders, no material
default by the other contracting parties has occurred thereunder, and no
event has occurred which with the giving of notice or the lapse of time, or
both, would constitute a material default by Span or Ocala, as the case may
be. Span has delivered to Tylan General true and complete copies of each
contract, lease, sublease, or other instrument described in Schedule
2.5(a).
(b) Except as disclosed in Schedule 2.5(b), neither Span nor Ocala is
a party to, or bound by, any Contract under the terms of which performance
by Span or Ocala according to the terms of this Agreement will be a default
or an event of acceleration, or would otherwise require consent.
(c) Neither Span nor Ocala is a party to, or bound by, any Contract
requiring Span or Ocala to perform engineering development or documentation
development services, which services have not been fully performed,
delivered and unconditionally accepted by the party contracting for such
services or any third party beneficiary thereof.
(d) Schedules 2.5(d) and 2.8(b) contain a list of every material
license, permit or governmental approval, order, directive and agreement
applied for, pending, issued, rejected or given to Span or Ocala with
respect to the conduct of their respective businesses or operations. Each
of Span and Ocala possesses all licenses, permits, and governmental
approvals and authorizations which are required in order to operate its
business as presently conducted and each of Span and Ocala is in compliance
with all such licenses, permits, approvals and authorizations, except where
the failure to possess, or comply with, such licenses, permits, approvals
and authorizations would not have a Material Adverse Effect.
(e) Schedule 2.5(e) contains a list of all pending or threatened
claims against Span or Ocala under each Contract (including, without
limitation, claims for back charges, rebates, price reductions, breaches of
product or service warranties or for product or service liability for
products manufactured or sold), excluding requests for service in the
ordinary course of business which Span or Ocala is required to perform
pursuant to the terms of standard warranties and which are covered by
warranty reserves, to the extent such claims, individually or in the
aggregate, could have a Material Adverse Effect.
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2.6 Employees.
(a) With respect to the employees of Span and Ocala:
(i) Schedule 2.6(a) contains a true and complete list of each
bonus, deferred compensation, incentive compensation, stock purchase,
stock option, severance or termination pay, hospitalization or other
medical, life or other insurance, supplemental unemployment benefits,
profit-sharing, pension, or retirement plan, program, agreement or
arrangement (collectively, the "Plans"), currently sponsored, maintained
or contributed to or required to be contributed to by Span or Ocala for
the benefit of any employee of Span or Ocala (an "Employee" and
collectively, the "Employees").
(ii) Neither Span nor Ocala, now or at any time in the past, has
maintained, sponsored or contributed to any employee pension benefit
plan (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), whether or not excluded from
coverage under specific Titles or Subtitles of ERISA) for the benefit of
Employees or former Employees (a "Pension Plan").
(iii) Span and Ocala maintain, sponsor or contribute to only those
employee welfare benefit plans (as defined in Section 3(1) of ERISA,
whether or not excluded from coverage under specific Titles or Subtitles
of ERISA) for the benefit of Employees or former Employees which are
described in Schedule 2.6(a) (the "Welfare Plans"), none of which is a
multiemployer plan (within the meaning of Section 3(37) of ERISA).
(iv) With respect to each of the Plans, Span has heretofore
delivered to Tylan General true and complete copies of each of the
following documents:
(A) a copy of each such Plan (including all amendments thereto);
(B) a copy of the annual report, if required under ERISA, with
respect to each such Plan for the last two years;
(C) a copy of the most recent Summary Plan Description, together
with each Summary of Material Modifications, if required under ERISA,
with respect to each such Plan, and all material employee
communications relating to such Plan;
(D) if such Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial
statements thereof;
(E) all contracts relating to the Plans, including, without
limitation, service provider agreements, insurance contracts,
investment management agreements, subscription and participation
agreements and recordkeeping agreements; and
(F) the most recent determination letter received from the IRS
with respect to each such Plan that is intended to be qualified under
Section 401 of the Code.
(v) Neither Span nor Ocala has, and neither has ever had, any
affiliates as determined under Section 4001(b)(1) of ERISA or Section
414(b), (c), (m) or (o) of the Code, nor has Span or Ocala ever been a
member of an "affiliated service group" within the meaning of Section
414(m) of the Code; neither Span nor Ocala has ever made a complete or
partial withdrawal from a multiemployer plan, as such term is defined in
Section 3(37) of ERISA, resulting in "withdrawal liability," as such
term is defined in Section 4201 of ERISA (without regard to subsequent
reduction or waiver of such liability under either Section 4207 or 4208
of ERISA).
(vi) Neither Span nor Ocala has any plan or commitment, whether
legally binding or not, to create any additional Welfare Plan or any
Pension Plan, or any plan or commitment to modify or change any existing
Welfare Plan, other than changes to comply with applicable law, that
would affect any Employee.
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(vii) No Welfare Plan provides death, medical or health benefits
(whether or not insured) with respect to current or former employees of
Span or Ocala after any such employee's retirement or other termination
of service (other than (A) benefit coverage mandated by applicable law,
including, without limitation, coverage provided pursuant to Section
4980B of the Code, (B) deferred compensation benefits accrued as
liabilities on the books of Span or Ocala, (C) benefits the full cost of
which is borne by the current or former employee (or the employee's
beneficiary)).
(viii) With respect to each of the Welfare Plans constituting a
group health plan within the meaning of Section 162(i) of the Code, the
provisions of Section 4980B of the Code have been complied with in all
material respects.
(ix) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including but not
limited to ERISA and the Code.
(x) Each of the Plans intended to be qualified under Section 401 of
the Code has received a favorable determination from the Internal
Revenue Service and nothing has occurred since such determinations to
adversely affect them.
(xi) Neither the execution of this Agreement nor the consummation
of the transactions contemplated hereby will result in any payment
(including, without limitation, any bonus, golden parachute or severance
payment) to any director of Span or Ocala or Employee under any Plan, or
materially increase the benefits payable under any Plan, or result in
the acceleration of the time of payment or vesting of such benefits.
(b) Schedule 2.6(b) contains a list of all employees of Span and Ocala
as of June 30, 1996. Said list correctly reflects, in all material
respects, their salaries, other compensation (other than under the Welfare
Plans), dates of employment, positions, social security numbers and birth
dates.
(c) Each of Span and Ocala has complied in all material respects and
is currently complying in all material respects with all applicable laws
relating to employment and employment practices, including, without
limitation, wages, workplace safety, equal employment opportunity and
nondiscrimination ("Labor Laws"). Other than as set forth on Schedule
2.6(c), neither Span nor Ocala has received any notice of noncompliance or
violation of any Labor Law that is pending or unresolved; no action is
pending or to the best knowledge of Span and each of the Principal
Shareholders, threatened before the National Labor Relations Board, the
Equal Employment Opportunity Commission, the U.S. Department of Labor or
any other foreign, federal, state or local governmental authority or court
relating to employment matters or any Labor Law; and there is no pending
or, to the best knowledge of Span and each of the Principal Shareholders,
threatened arbitration, suit, litigation or proceeding, against Span or
Ocala or any current or former director, major shareholder, officer or
supervisory employee of Span or Ocala, alleging wrongful termination,
racial, religious, sexual or age discrimination, improper post-termination
conduct, or breach of contract or covenant of employment.
(d) Schedule 2.6(d) identifies all employees of Span and Ocala who are
not available fully to perform work because of disability, layoff, leave or
similar status and sets forth the basis of such leave and the anticipated
date of return to full service.
(e) To the best knowledge of Span and each of the Principal
Shareholders, all individuals who are performing or have performed services
for Span or Ocala within the last two years and are or were classified as
"independent contractors" for tax purposes qualify for such classification.
(f) Neither Span nor Ocala is subject to any collective bargaining
agreement with respect to any of its employees, has any current labor
problems or disputes, or, to the best knowledge of Span and each of the
Principal Shareholders, has been subject to any effort to organize any of
its employees during the last 24 months.
2.7 Litigation and Claims; Compliance With Law.
(a) Except for litigation or proceedings relating to the environment
(which are exclusively provided for in Section 2.8 below), and as set forth
on Schedule 2.7(a) there is no material arbitration, suit, litigation or
proceeding, in law or in equity, pending, or, to the best knowledge of Span
and each of the
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Principal Shareholders, threatened before any court, tribunal, master or
governmental agency, authority or body in which Span or Ocala is a party or
to which its business or property is subject. To the best knowledge of Span
and each of the Principal Shareholders, there are no preliminary
proceedings or governmental investigations before any commission or other
administrative authority pending or threatened against Span or Ocala, and,
except as set forth on Schedule 2.7(a), no event has occurred or
circumstance exists that (with or without notice or lapse of time) may
serve as the basis for or give rise to any such arbitration, suit,
litigation or proceeding.
(b) Neither Span nor Ocala is a party to any decree, order or
arbitration award (or agreement entered into in any administrative,
judicial or arbitration proceeding with any governmental authority) with
respect to its properties, assets, personnel or business activities.
(c) Except for laws, rules and regulations relating to the environment
(which are exclusively provided for in Section 2.8 below), neither Span nor
Ocala is in violation of, or delinquent in respect to, any decree, order or
arbitration award or law, statute, or regulation of, or agreement with, or
any license or permit from, any federal, state, local and foreign
governmental authority to which its properties, assets, personnel or
business activities are subject or to which Span or Ocala is subject,
including, without limitation, laws, rules and regulations relating to
occupational health and safety, equal employment opportunities, fair
employment practices, and sex, race, religious and age discrimination,
except such violation of delinquency which either in the particular
instance or in the aggregate would not have a Material Adverse Effect.
2.8 Environmental Provisions.
(a) For the purposes of this Section 2.8:
(i) "Environmental Claim" means any material claim, action, cause
of action, investigation or notice (written or oral) by any person or
entity alleging potential liability (including, without limitation,
potential liability for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or resulting from (A)
the presence, or release into the environment, of any Material of
Environmental Concern at any location, whether or not owned or operated
by Span or Ocala, or (B) circumstances forming the basis for any
violation, or alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all federal, state, local and
foreign laws and regulations relating to pollution or protection of
human health or the environment (including, without limitation, ambient
air, surface water, ground water, land surface or subsurface strata),
including, without limitation, laws and regulations relating to
emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Materials of Environmental Concern.
(iii) "Materials of Environmental Concern" means chemicals,
pollutants, contaminants, wastes, toxic substances, petroleum and
petroleum products or any other substance now or hereafter regulated by
Environmental Laws or that is otherwise a danger to health, reproduction
or the environment.
(b) Except as set forth in Schedule 2.8(b), each of Span and Ocala is
in compliance in all material respects with all applicable Environmental
Laws, which compliance includes, but is not limited to, the possession by
Span and Ocala of all material permits and other governmental
authorizations required under applicable Environmental Laws, and material
compliance with the terms and conditions thereof. Except as set forth in
Schedule 2.8(b), neither Span nor Ocala has received any communication
(written or oral), whether from a governmental authority, citizens group,
employee or otherwise, that alleges that it is not in such full compliance,
and, to the best knowledge of Span and each of the Principal Shareholders,
there are no circumstances that may prevent or interfere with such material
compliance in the future. Except as set forth in Schedule 2.8(b), to the
best knowledge of Span and each of the Principal Shareholders, no current
or prior owner of any property owned or leased by Span or Ocala has
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<PAGE> 14
received any communication (written or oral), whether from a government
authority, citizens group, employee or otherwise, that alleges that it, or
Span or Ocala, is not in such full compliance. All permits and other
governmental authorizations currently held by Span or Ocala pursuant to the
Environmental Laws are identified in Schedule 2.8(b).
(c) Except as set forth in Schedule 2.8(c), there is no Environmental
Claim pending or, to the best knowledge of Span and each of the Principal
Shareholders, threatened against Span or Ocala or against any person or
entity whose liability for any Environmental Claim Span or Ocala has or may
have retained or assumed either contractually or by operation of law.
(d) Except as set forth in Schedule 2.8(d) and except as would not,
either in the particular instance or in the aggregate, have a Material
Adverse Effect, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without
limitation, the release, emission, discharge, presence or disposal of any
Material of Environmental Concern, that could form a reasonable basis for
any Environmental Claim against Span or Ocala or, to the best knowledge of
Span and each of the Principal Shareholders, against any person or entity
whose liability for any Environmental Claim Span or Ocala has or may have
retained or assumed either contractually or by operation of law.
(e) Without in any way limiting the generality of the foregoing, (i)
all on-site and off-site locations where Span or Ocala have stored,
disposed of or arranged for the disposal of, Materials of Environmental
Concern are identified in Schedule 2.8(e), (ii) to the best knowledge of
Span and each of the Principal Shareholders, all underground storage tanks
(whether or not in use by Span or Ocala), and the capacity and contents of
such tanks, located on property owned or leased by Span or Ocala, are
identified in Schedule 2.8(e), (iii) to the best knowledge of Span and each
of the Principal Shareholders, except as set forth in Schedule 2.8(e),
there is no asbestos contained in or forming part of any building, building
component, structure or office space owned or leased by Span or Ocala, and
(iv) to the best knowledge of Span and each of the Principal Shareholders,
except as set forth in Schedule 2.8(e), no polychlorinated biphenyls (PCBs)
are used or stored at any property owned or leased by Span or Ocala.
2.9 Properties.
(a) Span has previously delivered to Tylan General true and correct
copies of all leases pursuant to which Span or Ocala leases real or
personal property (the "Leases"). Each of the Leases is valid, binding and
enforceable against Span, Ocala or Whitson Properties, L.C. and, to the
best knowledge of Span and each of the Principal Shareholders, against each
of the lessors thereunder in accordance with its terms and is in full force
and effect. Except as described in Schedule 2.9(a), neither Span nor Ocala
is in default under any term of any Lease nor, to the best knowledge of
Span and each of the Principal Shareholders, is any other party thereto in
default thereunder, and no event has occurred which (whether with or
without notice, lapse of time or both) would constitute a default by Span
or Ocala. The transactions contemplated by this Agreement shall not
constitute a breach of any Lease. The properties subject to the Leases and
the conditions of the Leases are suitable in all material respects for the
business currently being conducted thereon by Span or Ocala, as the case
may be. There are no condemnation proceedings pending or, to the best
knowledge of Span and each of the Principal Shareholders, threatened with
respect to any portion of the property subject to the Leases.
(b) Each of Span and Ocala has good and valid title to its assets
reflected as owned in the April 30, 1996 Balance Sheet (as well as all of
its properties and assets which have been fully depreciated and are not
reflected therein) or acquired after that date. Except as set forth in
Schedule 2.9(b), as of April 30, 1996 and as of the Closing, each of Span
and Ocala shall have good and valid title to its assets, free and clear of
any mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances or charges of any kind
(collectively, "Liens"), other than (i) Liens shown on the April 30, 1996
Balance Sheet and the notes to the consolidated financial statements
attached thereto as securing specified liabilities (with respect to which
no default exists), (ii) Liens for current taxes not yet due, (iii)
purchase money security interests and (iv) all minor imperfections of title
and encumbrances, if any, which do not impair the operations of Span or
Ocala in any material respect. All of the assets of Span and Ocala are in
all material respects (i) fit for the purposes for which intended and (ii)
in good operating
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condition and repair, except for ordinary wear and tear, are currently used
by Span or Ocala in the ordinary course of its business, and are sufficient
for the operation of Span's or Ocala's business, as the case may be. As of
the Closing, the assets of Span and Ocala shall constitute all of the
properties, rights and assets (other than insurance policies) necessary for
the conduct of the businesses of Span and Ocala as currently conducted and
as conducted at Closing. Except as set forth in Schedule 2.9(b), all
material tangible assets of Span and Ocala are located in Plano, Texas,
Ocala, Florida, and San Clemente, California. Except as set forth on
Schedule 2.9(b), no tangible personal property has been loaned or otherwise
made available to Span or Ocala for development or other purposes.
(c) Span has fire and casualty insurance policies, with extended
coverage (subject to reasonable deductibles and policy exclusions),
sufficient to allow Span and Ocala to replace any of their material
properties that might be damaged or destroyed, and has liability insurance
reasonably adequate to protect each of Span and Ocala and its financial
condition against the risks involved in the business conducted by it.
Schedule 2.9(c) lists all such policies. Span and Ocala have paid all
premiums when due and have not done anything by way of action or inaction
which could be reasonably likely to invalidate any of such policies, in
whole or in part. There are no outstanding requirements or recommendations
of any insurance company that has issued a policy to Span or Ocala which
require or recommend any changes to the conduct of the business of Span or
Ocala, or any repair or other work with respect to any of its properties,
and no insurance company providing coverage to Span or Ocala has refused to
cover any claim or given any notice of defense subject to reservation of
rights or provided any notice of cancellation of any coverage.
(d) Each of Span and Ocala has good, marketable and insurable title to
each piece of real property owned by it (collectively, "Property"), free
and clear of all material liens, encumbrances, covenants, conditions,
restrictions, rights of way, easements and other matters affecting title.
True and complete copies of any title report relating to the Property have
been delivered to Tylan General.
(e) To the best knowledge of Span and each of the Principal
Shareholders, (i) no action, suit, proceeding or investigation is pending
or threatened (including without limitation environmental litigation and
eminent domain, condemnation or similar proceedings) materially affecting
the Property or against Span or Ocala and relating to or arising from its
interest in any tangible asset owned by it, and (ii) none of Span, Ocala or
either of the Principal Shareholders has received any notice of or has any
knowledge that any such proceedings are contemplated. To the best knowledge
of Span and each of the Principal Shareholders, (A) the uses presently
being made of the Property conform to existing zoning laws, (B) all
material permits and licenses necessary for the use, occupancy and
operation of the Property have been obtained, (C) Span and Ocala have
complied in all material respects with all laws, ordinances, rules and
regulations of any governmental agency or body having or asserting
jurisdiction over the Property, and (D) the Property complies in all
material respects with all building, fire and life safety codes and
requirements.
(f) Neither Span nor Ocala is a "foreign person" as that term is
defined in the Code and in applicable regulations.
2.10 Intellectual Property.
(a) Schedule 2.10(a) lists all domestic and foreign patents and patent
applications owned or licensed by Span or Ocala (the "Patents") and all
material agreements relating thereto. Except where such Patents are
indicated to be licensed, Span (or Ocala, as the case may be) owns the
Patents and all related patent rights free and clear of all liens, claims
or encumbrances and may assign or license them free and clear of any liens,
claims or encumbrances. There are no proceedings, and to the best knowledge
of Span and each of the Principal Shareholders, there are no claims,
threats or other communications, which challenge the validity of any claim
of any Patent. All such Patents are currently in compliance with formal
legal requirements (including payment of filing, examination and
maintenance fees and proofs of working or use), and neither Span nor either
of the Principal Shareholders has any reason to believe that any of the
Patents is not, or upon issuance will not be, valid and enforceable. No
Patent has been or is now involved in any interference proceeding or has
been challenged in any way, and neither Span nor either of the Principal
Shareholders is aware of any interfering patent or patent application.
Neither Span
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<PAGE> 16
nor either of the Principal Shareholders is aware of any relevant
information that is material to the examination of an application for any
Patent that has not been disclosed to the U.S. Patent and Trademark Office
pursuant to the disclosure requirements of 37 C.F.R. 1.56. Span has
delivered to Tylan General copies of all opinions and memoranda of counsel
received by it and relating to (i) the validity and patentability of the
Patents, (ii) infringement by third parties of the Patents and (iii) Span's
or Ocala's freedom to operate. Schedule 2.10(a) lists all existing
agreements including licenses relating to the Patents granted to third
parties by Span or Ocala. Except as disclosed in Schedule 2.10(a), subject
to any right of Span (or Ocala, as the case may be) to conduct an audit of
its licensees, all royalties and other payments due under said agreements
have been paid, and no party to those agreements is in material default in
any manner respecting its obligations under those agreements. Except for
the agreements listed in Schedule 2.10(a) and except for any license
implied by the sale of a product, no other license, covenant, or agreement
has been granted or entered into by Span or Ocala with respect to the
Patents.
(b) Schedule 2.10(b) lists all domestic and foreign registered
copyrights, trademarks and trademark applications owned by Span or Ocala
and/or licensed by Span or Ocala from (other than pursuant to standard
end-user Licenses) or to third parties (the "Trademarks" and "Copyrights"),
indicating in each case whether the Trademark or Copyright is owned or
licensed, and a listing and summary description of all agreements relating
to the Trademarks and Copyrights. Other than as set forth on Schedule
2.10(b), each of Span and Ocala owns free and clear of all liens, claims or
encumbrances the Trademarks and Copyrights which are so designated as owned
by it, and all agreements with respect to Trademarks and Copyrights are
valid and binding, are in full force and effect, and neither Span nor, to
the best knowledge of Span and each of the Principal Shareholders, any
other party thereto is in material default, or with the giving of notice or
lapse of time or both, would be in material default under the terms of such
agreement. All registered Trademarks and Copyrights are in compliance with
all formal legal requirements (including, in the case of Trademarks, the
timely post registration filing of affidavits of use and incontestability
and of renewal applications), are valid and enforceable, and are not
subject to any maintenance fees or taxes or actions falling due within 180
days after the Closing Date. To the best knowledge of Span and each of the
Principal Shareholders, there are no interference, opposition or
cancellation proceedings or infringement suits pending or threatened with
respect to any of the Trademarks or Copyrights. Neither Span nor either of
the Principal Shareholders has been advised or has any reason to believe
that Span or Ocala is infringing a trademark or copyright held by another
person.
(c) Each of Span and Ocala owns or has in its possession certain
information, know-how and show-how (including, without limitation, data,
documents, drawings, designs, software, procedures, customer lists and
other proprietary materials) relating to, without limitation, the
specification, examination, simulation, design, implementation,
manufacture, procurement of materials and the like from suppliers or
subcontractors, quality control and testing, use and delivery of its
products (the "Trade Secrets"). Each of Span and Ocala has taken reasonable
precautions to maintain Trade Secrets in confidence and to prevent their
disclosure to unauthorized persons, including having each of its employees
execute and deliver its standard proprietary information protection and
assignment agreement (a copy of which has been delivered to Tylan General).
To the best knowledge of Span and each of the Principal Shareholders, Span
(or Ocala, as the case may be) has good title and an absolute right to use
all Trade Secrets, and the use of the Trade Secrets does not infringe the
rights of any third party. Schedule 2.10(c) sets forth a list of all
agreements relating to the Trade Secrets. To the extent that the Trade
Secrets are not available in documentary or fixed form, disclosure shall be
made to Tylan General prior to Closing to permit Tylan General to make full
use of the Trade Secrets to operate the business of Span.
(d) All personnel, including Employees, agents, consultants and
contractors, who have contributed to or participated in the conception and
development of the software programs, technical documentation or other
intellectual property of Span or Ocala either (i) have been party to a
"work-for-hire" arrangement or agreement with Span or Ocala, in accordance
with applicable federal and state law, that has accorded Span (or Ocala, as
the case may be) full, effective, exclusive and original ownership of all
tangible and intangible property thereby arising, or (ii) have executed
appropriate instruments of
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<PAGE> 17
assignment in favor of Span (or Ocala, as the case may be) as assignee that
have conveyed to Span (or Ocala, as the case may be) full, effective and
exclusive ownership of all tangible and intangible property thereby
arising.
(e) To the best knowledge of Span and each of the Principal
Shareholders, no person is infringing upon any Patent, Trademark or
Copyright or is misappropriating any Trade Secret. To the best knowledge of
Span and each of the Principal Shareholders, none of the products sold by,
nor any processes or know-how used by, Span or Ocala, infringes any patent,
trademark or copyright of any third party. To the best knowledge of Span
and each of the Principal Shareholders, there is no intellectual property,
in any form, whether patent, trademark, tradename, trade secret, copyright
or otherwise, necessary for the operation of Span's or Ocala's business as
conducted which neither Span (or Ocala, as the case may be) does not
currently own or license on commercially reasonable terms.
2.11 Disclosure.
(a) The copies of all documents furnished by Span pursuant to the
terms of this Agreement are complete and accurate.
(b) For purposes of this Agreement and the transactions contemplated
hereby, none of (i) the representations and warranties made by Span and the
Principal Shareholders in this Agreement, (ii) the disclosure schedules
delivered to Tylan General pursuant hereto (the "Span Disclosure Schedule")
or (iii) any statement by Span or, to the best knowledge of Span and each
of the Principal Shareholders, any other person, contained in any document,
certificate or other writing furnished by Span to Tylan General in
connection with this Agreement, the Merger or the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact or
omits or will omit to state any material fact necessary to make the
statements made herein or therein, in light of the circumstances in which
they were made, not misleading.
2.12 Finders. Span has not dealt with any person, firm or corporation
(other than Blum & Co., Inc.) who is or may be entitled to a broker's
commission, finder's fee, investment banker's fee or similar payment from Span
for arranging the transaction contemplated hereby or introducing the parties to
each other.
2.13 Transactions with Affiliates. Except for compensation of employees,
every material transaction between Span and any of its "affiliates" or their
"associates" (as such terms are defined in the rules and regulations of the
Securities and Exchange Commission ("SEC")) other than Tylan, which is currently
in effect or was consummated in the last three years, is set forth on Schedule
2.13.
2.14 No Contemplated Transactions Inconsistent With Pooling-Of-Interests
Accounting. Neither Span nor any of the Shareholders is contemplating any
transaction that would constitute a change in equity interests in Span's Common
Shares or otherwise would result in the Merger not qualifying for
pooling-of-interests accounting.
3. REPRESENTATIONS AND WARRANTIES OF TYLAN GENERAL AND TYLAN GENERAL SUB
Tylan General and Tylan General Sub represent and warrant to Span and the
Shareholders as of the date of this Agreement and as of the Closing Date as
follows:
3.1 Organization.
(a) Tylan General is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Tylan General
Sub is a corporation duly organized, existing and in good standing under
the laws of the State of Delaware. Each of Tylan General and Tylan General
Sub has all necessary power and authority under applicable corporate law
and its organizational documents to own or lease its properties and to
carry on its business as presently conducted.
(b) Each of Tylan General and Tylan General Sub is qualified to do
business as a foreign corporation, and is in good standing, under the laws
of all jurisdictions where the nature of its business requires such
qualification and where the failure to so qualify would have a Material
Adverse Effect.
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(c) The authorized capital stock of Tylan General consists of
50,000,000 shares of common stock, par value $.001 per share, of which, as
of June 28, 1996, 6,532,586 shares were issued and outstanding, and
10,000,000 shares of preferred stock, par value $.001 per share, of which,
as of the date hereof, no shares were issued and outstanding. All the
issued and outstanding shares of Tylan General are validly issued, fully
paid and nonassessable and free of preemptive rights. As of June 28, 1996,
Tylan General has outstanding options to purchase 715,162 shares of Tylan
General Common Stock. Except as set forth above or pursuant to the exercise
of the foregoing options, there are not as of the date hereof any shares of
capital stock of Tylan General authorized, issued or outstanding or any
outstanding subscriptions, options, warrants, stock appreciation rights,
calls, rights, convertible securities or other agreements or commitments of
any character relating to unissued shares of capital stock of Tylan
General, or otherwise obligating Tylan General to issue, transfer or sell
any shares of capital stock of Tylan General, or other securities
convertible into, exchangeable for, or evidencing the right to subscribe
for, any shares of the capital stock of Tylan General. The authorized
capital of Tylan General Sub consists of 10,000 shares of Common Stock,
$.001 par value, 100 of which are issued and outstanding.
(d) Each of Tylan General and Tylan General Sub has full corporate
power and authority to execute, deliver and perform this Agreement. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by
the Boards of Directors of each of Tylan General and Tylan General Sub, and
no other corporate proceedings on the part of Tylan General or Tylan
General Sub are necessary for Tylan General and Tylan General Sub to
authorize this Agreement or to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by duly
authorized officers of Tylan General and Tylan General Sub. This Agreement
constitutes a legal, valid and binding obligation of Tylan General and
Tylan General Sub, enforceable against each of them in accordance with its
terms (except to the extent that enforcement is affected by laws pertaining
to bankruptcy, insolvency, reorganization and creditors' rights and by the
availability of injunctive relief, specific performance and other equitable
remedies).
(e) The Employment Agreements (as defined in Section 5.2) have been,
or prior to the Closing will be, duly and validly authorized and, when
executed and delivered pursuant to their terms, will constitute valid and
binding agreements of Tylan General enforceable against Tylan General in
accordance with their terms (except to the extent that enforcement is
affected by laws pertaining to bankruptcy, insolvency, reorganization and
creditors' rights and by the availability of injunctive relief, specific
performance and other equitable remedies).
(f) Except as may be required by the Securities Act, state securities
laws, the Texas Law or the DGCL, there is no requirement applicable to
Tylan General or Tylan General Sub to make any filing with, or to obtain
any permit, authorization, consent or approval of, any governmental or
regulatory authority as a condition to the lawful consummation by Tylan
General and Tylan General Sub of the transactions contemplated by this
Agreement. Neither Tylan General nor Tylan General Sub knows of any reason
why any required permit, authorization, consent or approval will not be
obtained. Neither the execution and delivery of this Agreement by Tylan
General and Tylan General Sub nor the consummation by Tylan General and
Tylan General Sub of the transactions contemplated by this Agreement will
(i) conflict with or result in any breach of any provision of the
Certificate of Incorporation or Bylaws of Tylan General or Tylan General
Sub, (ii) result in a material default (or give rise to any right of
termination, cancellation or acceleration) under any of the terms,
conditions or provisions of any note, bond, mortgage, indenture or other
evidence of indebtedness of Tylan General or Tylan General Sub or any
material license agreement, lease or other material contract, instrument or
obligation to which Tylan General or Tylan General Sub is a party or by
which Tylan General or Tylan General Sub or any of their respective assets
may be bound, (iii) violate any statute, rule, regulation, order, writ,
injunction, decree or arbitration award applicable to Tylan General or
Tylan General Sub or any of their respective assets which violation would
have a Material Adverse Effect on Tylan General or (iv) result in the
creation of any material (individually or in the aggregate) liens, charges
or encumbrances on any of the assets of Tylan General or Tylan General Sub.
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(g) Tylan General has delivered to Span complete and accurate copies
of Tylan General's Certificate of Incorporation and Bylaws, and Tylan
General Sub's Certificate of Incorporation and Bylaws, each as amended.
3.2 Common Stock To Be Issued. The Tylan General Common Stock to be
issued to the Shareholders hereunder, when issued by Tylan General to the
Shareholders pursuant to the terms of this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable, will be issued in compliance with
applicable federal and state securities laws, will have the rights and
preferences set forth in the Certificate of Incorporation of Tylan General
previously delivered to Span, and will be free and clear of all liens,
encumbrances and adverse claims; provided that the Tylan General Common Stock to
be issued to the Shareholders may be subject to restrictions on transfer under
federal securities laws as set forth in this Agreement.
3.3 Financial. The audited consolidated balance sheet of Tylan General as
of October 29, 1995 and the audited consolidated statement of operations and
statement of cash flows of Tylan General for the fiscal year ended October 29,
1995, each certified by Deloitte & Touche LLP, independent certified public
accountants, whose report thereon is included therein, have been prepared in
accordance with the books and records of Tylan General, which books and records
are complete, maintained on a consistent basis, and correctly reflect its
income, expenses, assets and liabilities, are true, complete and accurate and
present fairly the financial position of Tylan General as of the date of said
balance sheets and the results of operations of Tylan General for the periods
covered by said statements of operations, in accordance with GAAP consistently
applied, except as otherwise disclosed therein. The financial statements
described in this Section 3.3 are referred to in this Agreement as the "Tylan
General Financial Statements."
3.4 Disclosure.
(a) Tylan General has previously delivered to Span copies of Tylan
General's Annual Report on Form 10-K for the fiscal year ended October 29,
1995 and Tylan General's Quarterly Reports on Form 10-Q for the quarters
ended January 28, 1996 and April 28, 1996.
(b) The copies of all documents furnished by Tylan General pursuant to
the terms of this Agreement are complete and accurate.
(c) For purposes of this Agreement and the transactions contemplated
thereby, none of (i) the representations and warranties made by Tylan
General or Tylan General Sub in this Agreement or (ii) any statement by
Tylan General or, to the best of Tylan General's knowledge, any other
person, contained in any document, certificate or other writing furnished
by Tylan General to Span in connection with this Agreement, the Merger or
the transactions contemplated hereby (when read together), contains or will
contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the statements made herein or
therein, in light of the circumstances in which they were made, not
misleading.
3.5 Finders. Tylan General has not dealt with any person, firm or
corporation (other than Michael Khougaz and Adams, Harkness & Hill, Inc.) who is
or may be entitled to a broker's commission, finder's fee, investment banker's
fee or similar payment for arranging the transaction contemplated hereby or
introducing the parties to each other.
4. COVENANTS OF SPAN AND THE PRINCIPAL SHAREHOLDERS
Span and each of the Principal Shareholders hereby jointly and severally
covenant and agree as follows:
4.1 Negative Covenants. Between the date of this Agreement and the
Effective Date, unless Tylan General shall otherwise consent in writing, except
as provided hereunder, Span will not do, or commit to do, and neither of the
Principal Shareholders shall take any action, or omit to take any action, to
cause Span to do
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or commit to do, and Span shall not take any action, or omit to take any action,
to cause Ocala to do or commit to do any of the following:
(a) make any purchase, sale or disposition of any asset or property,
other than in the ordinary course of business consistent with past
practices or the disposition of immaterial assets, or mortgage, pledge,
subject to a lien or otherwise encumber any of its properties or assets
(other than the existing liens of Comerica Bank-Texas);
(b) incur any material contingent liability as a guarantor or
otherwise with respect to the obligations of any person or entity, except
for any such liability pursuant to Contracts listed on Schedule 2.5(a) (not
including any amendments thereto after the date hereof);
(c) take any action, or permit any action within Span's or the
Principal Shareholders' control, which would prevent the Merger from
qualifying as a tax-free reorganization under Section 368 of the Code or
from being eligible for pooling-of-interests accounting treatment in
accordance with GAAP and all rules, regulations and policies of the SEC,
and Span will use its best efforts to prevent any of the Shareholders or
any of the officers or directors of Span or Ocala from taking or permitting
any such action;
(d) amend any charter documents as previously delivered to Tylan
General;
(e) issue any of its capital shares or grant any options, warrants or
rights to acquire any capital shares, or modify the terms or waive any
rights under any options, warrants or other securities currently
outstanding or accelerate vesting with respect to any unvested options or
capital shares; or declare, set aside or pay any dividend or make any other
distribution in respect of its capital shares, or make any direct or
indirect redemption, purchase or other acquisition of its capital shares,
except pursuant to Contracts listed on Schedule 2.5(a) (not including any
amendments thereto after the date hereof);
(f) make any material change in the compensation payable or to become
payable to any of its officers or employees or enter into, amend or
terminate any employment or consulting agreements or waive any rights
thereunder;
(g) engage in transactions with any of its shareholders, officers,
directors or employees other than in the ordinary course of business,
except pursuant to agreements in existence on the date hereof and listed on
Schedule 2.5(a) (not including any amendments thereto after the date
hereof);
(h) enter into, amend, renew, extend, modify or terminate (prior to
its scheduled termination date) any sales, agency or distribution
agreement, any management or employment or consulting agreement, any lease,
license or royalty agreement, or any other material agreement or Contract
or waive any material rights thereunder;
(i) undertake any stock split, recapitalization or reorganization;
(j) solicit, encourage, negotiate, provide information for, or
otherwise cooperate in any way with, assist, or facilitate and use its best
efforts to prevent any of its officers and directors, employees,
representatives and agents from soliciting, encouraging or negotiating or
providing information for or otherwise cooperating in any way with,
assisting or facilitating any of the following (an "Acquisition Proposal"):
(i) any merger or consolidation of Span or Ocala with any person
other than Tylan General or Tylan General Sub,
(ii) any sale of assets of Span or Ocala to any person other than
Tylan General or Tylan General Sub (other than sales of inventory in the
ordinary course of business);
(iii) any equity or debt investment (other than on terms approved
by Tylan General) in Span or Ocala by any person; or
(iv) any purchase of outstanding securities of Span or Ocala by any
person;
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(k) undertake a course of action inconsistent with this Agreement or
which would cause any representation or warranty in this Agreement to
become untrue in any material respect or which would prevent any condition
precedent to its obligations under this Agreement from being satisfied at
or prior to the Effective Date;
(l) provide or publish to its shareholders any material which might
constitute an unauthorized "prospectus" within the meaning of the
Securities Act, or any impermissible solicitation under the applicable
state law;
(m) incur any material obligation other than in ordinary course of
business, except pursuant to Contracts listed on Schedule 2.5(a) (not
including any amendments thereto after the date hereof);
(n) borrow money (other than pursuant to Contracts listed on Schedule
2.5(a) (not including any amendments thereto after the date hereof) or
pursuant to capital expenditures between the date hereof and the Closing
Date that will not exceed $1,500,000 in the aggregate) or incur new or
additional indebtedness (other than as set forth above in this Section
4.1(n) and accounts payable or trade payables incurred in the ordinary
course of business and indebtedness pursuant to Contracts listed on
Schedule 2.5(a) (not including any amendments thereto after the date
hereof)) or loan money to any person (other than to Ocala in amounts not to
exceed $1,000,000 in the aggregate and travel and similar advances to
employees in the ordinary course of business);
(o) incur liabilities in connection with the leasing of property or
assets;
(p) issue any press release or public disclosure, either written or
oral, of the transactions contemplated by this Agreement without the prior
knowledge and written consent of Tylan General;
(q) make any investment in any other business or entity through
purchase of stock or securities, contribution to capital, property
transfer, purchase of property or assets or otherwise;
(r) alter the manner of keeping its books and accounts or its
accounting practices and procedures other than as required by GAAP;
(s) revalue any of its assets, including without limitation writing
down the value of inventory or accounts receivable other than in the
ordinary course of business consistent with past practice;
(t) make any material tax election except in the ordinary course of
business consistent with past practice, change any material tax election
already made, adopt any tax accounting method except in the ordinary course
of business consistent with past practice, change any tax accounting
method, enter into any closing agreement, settle any tax claim or
assessment or consent to any tax claim or assessment or any waiver of the
statute of limitations for any such claim or assessment;
(u) commence any lawsuit except for routine collection of bills or for
a breach of this Agreement;
(v) impair any of its Patents, Copyrights, Trademarks or other
intellectual property rights; or
(w) fail to maintain its qualifications to do business in any state in
which Span or Ocala is qualified, or fail to maintain any other permit,
license, authorization or approval material to the operations of its
business.
4.2 Affirmative Covenants. Prior to the Effective Date, Span will do, and
each of the Principal Shareholders will take such action as is necessary or
appropriate to cause Span to do, each of the following:
(a) use its best efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be
fully carried out;
(b) subject to Section 4.1, use its best efforts to obtain all
authorizations, consents and permits of others required to permit the
consummation by Span of the transactions contemplated by this Agreement and
the continuation of Span's business after the consummation of the Merger;
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(c) promptly advise Tylan General in writing of (i) any change that
has or had a Material Adverse Effect on Span; (ii) the occurrence of any
event which causes the representations and warranties made by Span in this
Agreement or the information included in the Span Disclosure Schedule to be
incomplete or inaccurate in any material respect; and (iii) the receipt of
any inquiry relating to an Acquisition Proposal from a third party,
including the identity of the third party and a copy of the inquiry;
(d) use reasonable best efforts to keep intact its business
organization, to keep available its present officers and key employees and
to preserve the goodwill of all suppliers, customers and others having
business relations with it;
(e) permit Tylan General and its authorized representatives to have
full access during normal business hours to all of its properties, assets,
records, tax returns, contracts and documents and furnish to Tylan General
and its authorized representatives such financial and other information
with respect to its business and properties as Tylan General may from time
to time reasonably request for purposes of making a review of the business
of Span and Ocala;
(f) as promptly as reasonably practicable after the date of this
Agreement, file with any governmental agencies or departments all notices,
reports and other documents required by law with respect to this Agreement
and the Merger and promptly submit any additional information or
documentary material properly requested by any such governmental agency or
department;
(g) in the event that between the date hereof and the Effective Date,
any federal, state, local or foreign governmental authority shall commence
any examination, review, investigation, action, suit or proceeding against
Span with respect to the Merger, give prompt notice thereof to Tylan
General, keep Tylan General informed as to the status thereof, and (except
as may be prohibited by such governmental authority or by any court order
or decree in an action or suit instituted by a person other than Span or an
affiliate of Span) permit Tylan General to observe and be present at each
meeting, conference or other proceeding and have access to and be consulted
in connection with any document filed or provided to such governmental
authority in connection with such examination, review, investigation,
action, suit or proceeding (provided, however, that Span will not be
required to waive any privilege it may have in connection with any such
examination, review, investigation, action, suit or proceeding);
(h) use its best efforts to deliver to Tylan General a Continuity of
Interest Certificate in the form attached hereto as Exhibit 4.2(h) (a
"Continuity of Interest Certificate") executed by each Shareholder;
(i) deliver to Tylan General at the Closing the resignations of all
directors of Span;
(j) promptly provide Tylan General with (i) copies of all written
materials and written communications furnished by Span to its shareholders
after the date of this Agreement, and (ii) copies of all notices, reports
or other documents filed with any government agency or department pursuant
to Section 4.2(g) hereof; (provided, however, that Span will not be
required to waive any privilege it may have in connection with any such
examination, review, investigation, action, suit or proceeding);
(k) promptly provide Tylan General copies of all material operating
and financial reports prepared by Span, including copies of Span's
consolidated balance sheet and related consolidated statements of
operations and consolidated statements of cash flows for each month
commencing January 1996 through the Closing Date; such monthly financial
statements shall be prepared in conformity with GAAP applied on a
consistent basis and shall fairly present (subject to immaterial year-end
audit adjustments) the financial condition, results of operations and cash
flows of Span as of the dates and for the periods covered by such
statements and shall be delivered promptly after preparation, but in no
event later than 21 days after the end of the month;
(l) use its best efforts to deliver to Tylan General, or to cause its
counsel to deliver to Tylan General, the closing documents referred to in
this Agreement;
(m) with respect to the Notification letter described in Section 6.15,
provide the notification to the IRS required pursuant to Treasury
Regulations Section 1.897-2(h)(2);
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(n) use its best efforts to deliver to Tylan General the audited
consolidated balance sheet of Span as of February 29, 1996 and the audited
consolidated statement of operations, consolidated statement of cash flows
and consolidated statement of changes in shareholders' equity of Span for
the six months ended February 29, 1996, each certified by Ernst & Young
LLP, whose report thereon shall be unqualified;
(o) use its best efforts to deliver to Tylan General an Affiliate
Agreement in the form attached hereto as Exhibit 4.2(o) executed by each
Affiliate;
(p) use its best efforts to deliver to Tylan General an Investment
Letter in the form attached hereto as Exhibit 4.2(p) executed by each
Shareholder;
(q) provide to tax counsel for both Tylan General and Span appropriate
representation certificates as described in Sections 6.16 and 7.8;
(r) take all steps necessary in accordance with its Articles of
Incorporation and By-laws to obtain the requisite vote of its shareholders
for the purpose of approving this Agreement and for such other purposes as
may be necessary. Unless this Agreement shall have been validly terminated
as provided herein, the Board of Directors of Span (subject to any
fiduciary duties it may have under applicable law to do otherwise) will (i)
recommend to its shareholders the approval of this Agreement, the
transactions contemplated hereby and any other matters to be submitted to
its shareholders in connection therewith, to the extent that such approval
is required by applicable law in order to consummate the Merger, and (ii)
use its reasonable, good faith efforts to obtain the approval by its
shareholders of this Agreement and the transactions contemplated hereby.
5. COVENANTS OF TYLAN GENERAL AND TYLAN GENERAL SUB
Tylan General and Tylan General Sub covenant and agree as follows:
5.1 Negative Covenants. From the date of this Agreement until the
Effective Date, Tylan General and Tylan General Sub will not, unless Span shall
otherwise consent in writing:
(a) undertake a course of action inconsistent with this Agreement or
which would cause any representation or warranty of Tylan General in this
Agreement to become untrue in any material respect or which would prevent
any condition precedent to its obligations under this Agreement from being
satisfied at or prior to the Effective Date;
(b) take or permit any action which would prevent the Merger from
qualifying as a reorganization under Section 368 of the Code or from being
eligible for pooling-of-interests accounting treatment in accordance with
GAAP and all rules, regulations and policies of the SEC, and Tylan General
will use its best efforts to prevent any of its officers or directors from
taking or permitting any such action;
(c) amend its Certificate of Incorporation in any manner which would
adversely affect the Merger;
(d) declare, set aside or pay any dividend in respect of its capital
shares; or
(e) issue any press release or public disclosure, either written or
oral, of the transactions contemplated by this Agreement without the prior
knowledge and written consent of Span except to the extent required by
applicable laws, rules and regulations in which event Span shall be
provided with a copy of any such release at or prior to its publication; or
(f) change the number of votes to which each share of Tylan General's
capital stock is entitled.
5.2 Affirmative Covenants. Prior to the Effective Date, Tylan General
and/or Tylan General Sub will do the following:
(a) use its best efforts to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement,
to the end that the transactions contemplated by this Agreement shall be
fully carried out, provided, however, that in no event shall this covenant
be deemed to
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impose any obligation on Tylan General or Tylan General Sub to waive any of
the conditions set forth in Article 6;
(b) use its best efforts to obtain all authorizations, consents and
permits of others required to permit the consummation by Tylan General and
Tylan General Sub of the transactions contemplated by this Agreement;
(c) use its best efforts to qualify the Tylan General Common Stock to
be issued pursuant to the Merger under the securities or "blue sky" laws of
every jurisdiction of the United States in which a Shareholder has an
address on the records of Span's transfer agent on the record date for
determining the Span shareholders entitled to notice of and to vote on the
Merger, except any such jurisdiction with respect to which counsel for
Tylan General has determined that such qualification is not required under
the securities or "blue sky" laws of such jurisdiction;
(d) as promptly as reasonably practicable after the date of this
Agreement, file with any governmental agencies or departments of all
notices, reports and other documents required by law with respect to this
Agreement and the Merger and promptly submit any additional information or
documentary material properly requested by any such governmental agency or
department;
(e) use its best efforts to cause the Tylan General Common Stock to be
issued pursuant to the Merger to be listed on the Nasdaq National Market,
free of restrictions on transfer other than (i) restrictions pursuant to
Rule 144 and Rule 145 promulgated under the Securities Act and the
interpretations of the SEC on restrictions on resale of securities issued
under Section 4(2) of the Securities Act and the Investment Letters
referred to Section 4.2(p), and (ii) restrictions related to the Continuity
of Interest Certificate referred to in Section 4.2(h);
(f) cause Tylan General Sub to perform all of its agreements contained
herein;
(g) promptly advise Span in writing of (i) any change that has or had
a Material Adverse Effect on Tylan General; and (ii) the occurrence of any
event which causes the representations or warranties made by Tylan General
or Tylan General Sub in this Agreement to be incomplete or inaccurate in
any material respect;
(h) in the event that between the date hereof and the Effective Date,
any federal, state, local or foreign governmental authority shall commence
any examination, review, investigation, action, suit or proceeding against
Tylan General with respect to the Merger, give prompt notice thereof to
Span, keep Span informed as to the status thereof, and (except as may be
prohibited by such governmental authority or by any court order or decree
in an action or suit instituted by a person other than Tylan General or an
affiliate of Tylan General) permit Span to observe and be present at each
meeting, conference or other proceeding and have access to and be consulted
in connection with any document filed or provided to such governmental
authority in connection with such examination, review, investigation,
action, suit or proceeding (provided, however, that neither Tylan General
nor Tylan General Sub will be required to waive any privilege either of
them may have in connection with any such examination, review,
investigation, action, suit or proceeding);
(i) enter into an employment agreement in substantially the form
attached hereto as Exhibit 5.2(i) with Don E. Whitson (the "Whitson
Employment Agreement");
(j) enter into an employment agreement in substantially the form
attached hereto as Exhibit 5.2(j) with each of Leo E. Whitson, Kevin
MacGibbon, Majid Fazeli, George A. Yurch, John Rabbitt, Tom Gray and Brian
Day (collectively with the Whitson Employment Agreement, the "Employment
Agreements");
(k) provide to tax counsel for both Tylan General and Span appropriate
representation certificates as described in Sections 6.16 and 7.8;
(l) use its best efforts to substitute Tylan General for Don E.
Whitson as guarantor of Span's senior indebtedness and leases that Don E.
Whitson guarantees (which senior indebtedness and leases are
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identified on Schedule 5.2(l)) and, if Tylan General is unable to do so
within 90 days after the Closing Date, Tylan General shall repay such
indebtedness in full.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF TYLAN GENERAL AND TYLAN GENERAL SUB
The obligations of Tylan General and Tylan General Sub to consummate the
transactions contemplated by this Agreement are subject to the fulfillment,
prior to or upon the Closing, of the following conditions precedent:
6.1 Satisfactory Completion Of Pre-Acquisition Review. Tylan General
shall have satisfactorily completed its pre-acquisition investigation and review
of Span's business, condition, assets, liabilities, operations, financial
performance, net income and prospects and shall be satisfied with the results of
that investigation and review as evidenced by the approval of such results by a
majority of the members of the Board of Directors of Tylan General.
6.2 Compliance With Covenants; Representations And Warranties
Correct. Span and the Share-holders shall have complied with and performed in
all material respects each covenant contained in this Agreement to be performed
by it or them at or prior to the Closing Date; the representations and
warranties of Span and the Shareholders contained in this Agreement shall be
true and correct in all material respects as of the Closing Date with the same
effect as though made on the Closing Date except to the extent that information
in Span's Schedules as of the date hereof changes as of the Closing Date (and
such changes are contained in the certificate referred to below in this Section
6.2) and each such change does not violate Section 4.1 or 4.2 hereof or any
other provision in this Article 6; and Span shall have delivered to Tylan
General a certificate of the Chief Executive Officer and the Chief Financial
Officer of Span evidencing compliance with the conditions set forth in this
Section 6.2.
6.3 No Material Adverse Change. After the date hereof, there shall have
been no change that had an adverse effect on the business, operations, condition
(financial or otherwise), assets or prospects of Span and Ocala, taken as a
whole, in excess of $100,000.
6.4 Consents Of Others. The consent to the Merger of each third party
whose consent is required for Span to consummate the transactions completed
hereby shall have been received except for consents which, if not obtained, in
the aggregate would not have a Material Adverse Effect on Span, including
without limitation the parties to the contracts listed on Schedule 2.5(a).
6.5 Legal Opinion. Tylan General shall have received an opinion of
Gardere & Wynne, L.L.P., counsel to Span, dated the Closing Date, substantially
to the effect of Exhibit 6.5 hereto.
6.6 Dissenters' Rights. No holders of outstanding Span Common Shares
shall be, or shall have the right to become, entitled to dissenters rights
pursuant to Section 5.11 of the Texas Law.
6.7 Continuity of Interest. Tylan General shall have received prior to
the Closing Date executed copies of the Continuity of Interest Certificate from
the Shareholders as provided in Section 4.2(h).
6.8 Absence of Restraint. No action shall be pending or threatened before
any court or administrative body to restrain, enjoin or otherwise prevent the
consummation of, or which questions the validity or legality of, this Agreement
or the transactions contemplated hereby, and no order, statute, rule,
regulation, executive order, decree, judgment, injunction or court order shall
have been enacted, entered, issued or promulgated by any court or governmental
authority which prohibits or materially restricts the consummation of this
Agreement and the transactions contemplated hereby, and no such action shall be
threatened.
6.9 No Litigation. No litigation shall have commenced against Span or
Ocala which would, if adversely determined, have an adverse effect on the
business, operations, condition (financial or otherwise), assets or prospects of
Span and Ocala, taken as a whole, in excess of $100,000.
6.10 Required Approvals. Tylan General, Tylan General Sub and Span shall
have received all such governmental approvals, consents, authorizations or
modifications as may be required to permit the perform-
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ance by Tylan General, Tylan General Sub and Span, of their respective
obligations under this Agreement and the consummation of the transactions herein
contemplated.
6.11 State Securities Law Requirements. The shares of Tylan General
Common Stock to be issued in connection with the Merger shall have been issued
in transactions qualified or exempt from registration under the securities or
"blue sky" laws of every jurisdiction required under Section 5.2(c) hereof.
6.12 Span Shareholders' Approval. The approval and adoption of this
Agreement by the requisite vote of the outstanding shares of Span Common Shares
entitled to vote, in accordance with Section 4.2(r) hereof and the applicable
provisions of the Texas Law, shall have occurred and be continuing and remain in
full force and effect.
6.13 Noncompetition Agreements. Each of the Shareholders who will be
party to an Employment Agreement as provided in Section 5.2(i) or 5.2(j) shall
have executed a noncompetition agreement substantially in the form attached
hereto as Exhibit 6.13.
6.14 Resignations. Tylan General shall have received the written
resignation, effective as of the Closing, of each director of Span.
6.15 FIRPTA. Tylan General, as agent for the Shareholders, shall have
received a properly executed "FIRPTA" Notification Letter, in form and substance
reasonably acceptable to Tylan General, which states that shares of Span do not
constitute "United States Real Property Interests" under Section 897(c) of the
Code for purposes of satisfying Tylan General's obligations under Treasury
Regulations Section 1.1445-2(c)(3).
6.16 Tax Opinion. Each of Tylan General and Span shall have received a
written opinion from its respective counsel, dated the Closing Date, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a)(2)(E) of the Code, which opinions will be substantially identical
in form and substance. Such counsel shall, in rendering such opinions, be
entitled to rely on, and to the extent reasonably required the parties shall
make, reasonable representations related thereto.
6.17 Pooling-Of-Interest Letters. Tylan General shall have received, if
it so requests, a reaffirmation from Ernst & Young LLP, Tylan General's and
Span's independent public accountants, dated the Effective Date, a letter in
form and substance satisfactory to Tylan General, to the effect that the Merger
will qualify for pooling-of-interests accounting treatment in accordance with
GAAP and all rules, regulations and policies of the SEC.
6.18 Affiliate Agreements. Tylan General shall have received an Affiliate
Agreement from each Affiliate as contemplated by Section 4.2(o).
6.19 Accounts Receivable. The aging of Span's accounts receivable on the
Closing Date shall not be materially worse than that shown on Schedule 2.2(c).
6.20 Investment Letters. Each of the Shareholders shall have executed and
delivered an Investment Letter as contemplated by Section 4.2(p).
7. CONDITIONS PRECEDENT TO SPAN'S OBLIGATIONS
The obligation of Span to consummate the transactions contemplated herein
is subject to the fulfillment, prior to or upon the Closing, of the following
conditions precedent:
7.1 Compliance with Covenants; Representations and Warranties
Correct. Tylan General and Tylan General Sub shall have complied with and
performed in all material respects each covenant contained in this Agreement to
be performed by them at or prior to the Closing Date; the representations and
warranties of Tylan General and Tylan General Sub contained in this Agreement
shall be true and correct in all material respects as of the Closing Date with
the same effect as though made on the Closing Date; and Tylan General shall have
delivered to Span a certificate of the Chief Executive Officer and Chief
Financial Officer of Tylan General evidencing compliance with the conditions set
forth in this Section 7.1.
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7.2 No Material Adverse Change. After the date hereof, there shall have
been no change that had a Material Adverse Effect on Tylan General.
7.3 Legal Opinion. Span shall have received an opinion of Cooley Godward
Castro Huddleson & Tatum, dated the Closing Date, substantially to the effect of
Exhibit 7.3 hereto.
7.4 Required Approvals. Tylan General, Tylan General Sub and Span shall
have received all such governmental approvals, consents, authorizations or
modifications as may be required to permit the performance by Tylan General,
Tylan General Sub and Span, of their respective obligations under this Agreement
and the consummation of the transactions herein and therein contemplated.
7.5 Securities Law Requirements. All permits, licenses, consents and
approvals necessary under any laws relating to the issuance and sale of the
Tylan General Common Stock to the Shareholders shall have been issued or given,
and no such permit, license, consent or approval, shall have been revoked,
canceled, terminated, suspended or made the subject of any stop order or
proceeding therefor.
7.6 Span Shareholders' Approval. The approval and adoption of this
Agreement by the requisite vote of the outstanding Span Common Shares entitled
to vote, as required by and in accordance with the applicable provisions of the
Texas Law, shall have occurred and remain in full force and effect.
7.7 Absence of Restraint. No action shall be pending or threatened before
any court or administrative body to restrain, enjoin or otherwise prevent the
consummation of, or which questions the validity or legality of, this Agreement
or the transactions contemplated hereby, and no order, statute, rule,
regulation, executive order, decree, judgment, injunction or court order shall
have been enacted, entered, issued or promulgated by any court or governmental
authority which prohibits or materially restricts the consummation of this
Agreement and the transactions contemplated hereby, and no such action shall be
threatened.
7.8 Tax Opinion. Each of Tylan General and Span shall have received a
written opinion from its respective counsel, dated the Closing Date, to the
effect that the Merger will constitute a reorganization within the meaning of
Section 368(a)(2)(E) of the Code, which opinions will be substantially identical
in form and substance. Such counsel shall, in rendering such opinions, be
entitled to rely on, and to the extent reasonably required the parties shall
make, reasonable representations related thereto.
7.9 Employment Agreements. The Employment Agreements shall have been
executed by Tylan General.
7.10 Chairman of the Board. David J. Ferran ("Ferran") shall be the
Chairman of the Board and Chief Executive Officer of Tylan General, and Ferran
shall be active on a full-time basis in Tylan General's business.
7.11 Board of Directors. Don Whitson shall have been elected for a full
term to serve on Tylan General's Board of Directors.
8. RESTRICTIONS ON TRANSFERABILITY; COMPLIANCE WITH SECURITIES ACT;
REGISTRATION RIGHTS
8.1 Certain Definitions. As used in this Article 8, the following terms
shall have the following respective meanings:
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
"Holder" shall mean any Shareholder and any person holding Registrable
Securities to whom the rights under this Article 8 have been transferred in
accordance with Section 8.12 hereof.
"Initiating Holders" shall mean any Holders who in the aggregate are
Holders of greater than 30% of the then outstanding Registrable Securities.
"Prior Registration Rights Agreements" shall mean (i) the Registration
Rights Agreement, by and between Tylan General and The KB Mezzanine Fund,
L.P., and (ii) the Amended and Restated
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Registration Rights Agreement, by and between Tylan General and the
stockholders who are signatories thereto, each dated as of November 11,
1992.
"Publication Date" shall mean the date on which Tylan General
publishes financial results covering at least 30 days of post-Merger
combined operations;
"Registrable Securities" means the Tylan General Common Stock issued
to the Shareholders in the Merger and any Tylan General Common Stock issued
or issuable in respect of the Tylan General Common Stock issued to the
Shareholders in the Merger upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event; provided,
however, that shares of Common Stock or other securities shall no longer be
treated as Registrable Securities if (i) they have been sold to or through
a broker or dealer or underwriter in a public distribution or a public
securities transaction or (ii) they have been sold in a transaction exempt
from the registration and prospectus delivery requirements of the
Securities Act so that all transfer restrictions and restrictive legends
with respect thereto were removed upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except Selling
Expenses as defined below, incurred by Tylan General in complying with
Sections 8.5 and 8.6 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for Tylan General, Blue Sky fees
and expenses, the expense of any special audits incident to or required by
any such registration (but excluding the compensation of regular employees
of Tylan General which shall be paid in any event by Tylan General).
"Restricted Securities" shall mean the securities of Tylan General
required to bear the legend set forth in Section 8.3 hereof.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities
registered by the Holders, and, except as set forth in Registration
Expenses above, all reasonable fees and disbursements of counsel for any
Holder (if such counsel is different from counsel to the Tylan General).
8.2 Restrictions on Transferability. The Registrable Securities shall not
be sold, assigned, transferred or pledged except upon the conditions specified
in this Article 8, which conditions are intended to ensure compliance with the
provisions of the Securities Act. Each of the Shareholders will cause any
proposed purchaser, assignee, transferee or pledgee of the Registrable
Securities of such Shareholder in any transaction other than a registered
transaction to agree to take and hold such securities subject to the provisions
and upon the conditions specified in this Article 8.
8.3 Restrictive Legend. Each certificate representing Registrable
Securities and any other securities issued in respect of the Registrable
Securities upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 8.4 below) be stamped or otherwise imprinted with a legend
substantially in the following form (in addition to any legend required under
applicable state securities laws):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
CORPORATION RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES
AND RESTRICTING THEIR TRANSFER
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MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION.
Each Holder consents to Tylan General making a notation on its records and
giving instructions to any transfer agent of the Tylan General Common Stock as
and if necessary in order to implement the restrictions on transfer established
in this Article 8.
8.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 8.4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than a
transfer not involving a change in beneficial ownership), unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to Tylan General of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (a) a written opinion of legal
counsel who shall be, and whose legal opinion shall be, reasonably satisfactory
to Tylan General, addressed to Tylan General, to the effect that the proposed
transfer of the Restricted Securities may be effected without registration under
the Securities Act, or (b) a "no action" letter from the SEC to the effect that
the transfer of such securities without registration will not result in a
recommendation by the staff of the SEC that action be taken with respect
thereto, whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to Tylan General. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144 or in a registered transaction, the
appropriate restrictive legend set forth in Section 8.3 hereof, except that such
certificate shall not bear such restrictive legend if, in the reasonable opinion
of counsel for such holder and Tylan General, such legend is not required in
order to establish compliance with any provision of the Securities Act.
8.5 Requested Registration.
(a) If Tylan General shall receive from Initiating Holders a written
request that Tylan file a registration statement on Form S-3 (or any
successor form to Form S-3) for a public offering of shares of the
Registrable Securities and Tylan General is a registrant entitled to use
Form S-3 to register the Registrable Securities for such an offering, Tylan
General shall:
(i) promptly give written notice of the proposed registration to
all other Holders; and
(ii) as soon as practicable, use its best lawful efforts to effect
such registration (including, without limitation, appropriate
qualification under applicable Blue Sky or other state securities laws
and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any Holders joining in such request as are
specified in a written request received by Tylan General within 20 days
after the written notice specified in clause (i) above has been given
(subject in any event to Section 8.5(a)(ii)(C) and Section 8.14);
provided, however, Tylan General shall not be obligated to take any
action to effect any registration pursuant to this Section 8.5:
(A) in any particular jurisdiction in which Tylan General would be
required to execute a general consent to service of process in effecting
such registration unless Tylan General is already subject to service in
such jurisdiction and except as may be required by the Securities Act;
or
(B) prior to the Publication Date; or
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(C) with respect to any Registrable Securities in excess of a
cumulative total of 50% of the Tylan General Common Stock issued to the
Shareholders in the Merger, until after the first anniversary of the
Closing Date; or
(D) during the period starting with the date 30 days prior to Tylan
General's estimated date of filing of, and ending on the date six months
immediately following, the effective date of any registration statement
pertaining to securities of Tylan General (other than a registration of
securities in a shelf registration pursuant to Rule 415 (or any similar
successor rule promulgated by the SEC), in a Rule 145 (or any similar
successor rule promulgated by the SEC) transaction, for the resale of
securities solely by selling shareholders or with respect to an employee
benefit plan), provided that Tylan General is actively employing in good
faith all reasonable efforts to cause such registration statement to
become effective; or
(E) if Tylan General shall furnish to such Holder a certificate
signed by the President of Tylan General stating that in the good faith
judgment of the Board of Directors it would be seriously detrimental to
Tylan General or its shareholders for a registration statement to be
filed in the near future, provided that pursuant to this clause (E)
Tylan General cannot delay implementation of such request for
registration for more than 30 days; or
(F) if Tylan General has effected an aggregate of two registrations
pursuant to Section 8.5 and such registrations have been declared or
ordered effective. For purposes of the foregoing, a registration from
which the Holders have withdrawn all Registrable Securities prior to the
effectiveness of such registration (or with respect to which Holders of
a majority of Registrable Securities have requested that all Registrable
Securities be withdrawn) shall not count as one of the two registrations
permitted to the Holders.
(b) If a registration pursuant to this Section 8.5 is for a registered
public offering involving an underwriting (pursuant to the request of the
Shareholders' Agent (as defined in Section 9.7)), Tylan General shall so
advise the Holders as part of the notice given pursuant to Section
8.5(a)(i). In such event, the right of any Holder to registration pursuant
to this Section 8.5 shall be conditioned upon such Holder's participation
in the underwriting arrangements required by this Section 8.5, and the
inclusion of such Holder's Registrable Securities in the underwriting to
the extent requested shall be limited to the extent provided herein.
Tylan General shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by Shareholders' Agent but subject to Tylan General's reasonable approval.
Notwithstanding any other provision of this Section 8.5, if the managing
underwriter advises the Shareholders' Agent in writing that marketing factors
require a limitation of the number of shares to be underwritten, then Tylan
General shall so advise all Holders and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, Tylan General or the underwriters may
round the number of shares allocated to any Holder to the nearest multiple of
100 shares.
If any selling Holder of Registrable Securities disapproves of the terms of
the underwriting, such person may elect to withdraw therefrom by written notice
to Tylan General, the managing underwriter and the Shareholders' Agent. The
Registrable Securities so withdrawn shall also be withdrawn from registration,
and such Registrable Securities shall not be transferred in a public
distribution prior to 120 days after the effective date of such registration, or
such shorter period of time as the underwriters may require.
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8.6 Company Registration.
(a) If at any time or from time to time Tylan General shall determine
to register any of its securities, either for its own account or the
account of a security holder or holders, in connection with a public
offering of such securities solely for cash on a form that would also
permit the registration of Registrable Securities, Tylan General will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under Blue Sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written
request or requests, made within 20 days after the written notice
specified in clause (i) above has been given.
provided, however, Tylan General shall not be obligated to take any action
to effect any registration pursuant to this Section 8.6 (A) prior to the
Publication Date or (B) if the Holders of a majority of the Registrable
Securities then outstanding give written notice to Tylan prior to the
effectiveness of such registration that all of the Registrable Securities
are to be withdrawn from such registration.
(b) If the registration of which Tylan General gives notice is for a
registered public offering involving an underwriting, Tylan General shall
so advise the Holders as a part of the written notice given pursuant to
Section 8.6(a)(i). In such event, the right of any Holder to registration
pursuant to this Section 8.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with Tylan General and the other holders distributing their
securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such
underwriting by Tylan General. Notwithstanding any other provision of this
Section 8.6, if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the Registrable Securities to be included in
such registration. If the managing underwriter so limits the number of
Registrable Securities to be registered and underwritten, Tylan General
shall so advise all selling stockholders of Tylan General, including the
Holders, and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
stockholders of Tylan General, including the Holders, in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities
held by such selling stockholders of Tylan General, including the selling
Holders at the time of filing the registration statement; provided,
however, that with respect to any registration resulting from any demand
registration rights (the "Prior Demand Rights") pursuant to the Prior
Registration Rights Agreements, the Registrable Securities shall be
included in such registration only if all of the securities requested to be
registered pursuant to the Prior Demand Rights have been included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, Tylan General may round the number of shares allocated to
any Holder or holder to the nearest multiple of 100 shares.
If any selling Holder disapproves of the terms of any such
underwriting, including any limitation on the number of Registrable
Securities that such Holder may include in such underwriting, such person
may elect to withdraw therefrom by written notice to Tylan General and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration and shall not be
transferred in a public distribution prior to 120 days after the effective
date of the registration statement relating thereto, or such shorter period
of time as the underwriters may require.
(c) Tylan General shall have the right to terminate or withdraw any
registration initiated by it under this Section 8.6 prior to the
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration.
(d) From and after the date hereof, Tylan General shall not enter into
any agreement with any holder or prospective holder of any securities of
Tylan General which would allow such holder or prospective holder to
require Tylan General to include shares or securities in any registration
initiated by
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the Holders under Section 8.5 of this Agreement, without the written
consent of a majority in interest of the Holders requesting registration
unless, under the terms of such agreement, such holder or prospective
holder may include such securities in such registration only to the extent
that the inclusion of its securities will not diminish the amount of
Registrable Securities that are included. Nothing in this Section 8.6(d)
shall limit the right of Tylan General to enter into an agreement with any
holder or prospective holder of any securities of Tylan General pursuant to
which Tylan General will agree to include among the securities which it is
registering upon its own initiation securities owned by such holder.
8.7 Expenses of Registration. All Registration Expenses incurred in
connection with any registration of Registrable Securities pursuant to Sections
8.5 and 8.6 shall be borne by Tylan General. All Selling Expenses relating to
Registrable Securities registered on behalf of the Holders shall be borne by the
Holders of such Registrable Securities pro rata on the basis of the number of
shares so registered; provided that each Holder is solely responsible for the
fees and disbursements of its separate individual counsel, if any.
8.8 Registration Procedures. In the case of each registration,
qualification or compliance effected by Tylan General pursuant to this Article
8, Tylan General will keep each Holder advised in writing as to the initiation
of each registration, qualification and compliance and as to the completion
thereof. At its expense, Tylan General will:
(i) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for the lesser of (A)
180 days or (B) until the distribution described in the registration
statement has been completed; and
(ii) furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number
of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably
request in order to facilitate the public offering of such securities.
8.9 Indemnification.
(a) Tylan General will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to
this Article 8, and each underwriter, if any, and each person who controls
any underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or any violation by
Tylan General of the Securities Act or the Exchange Act or any rule or
regulation promulgated under the Securities Act or the Exchange Act
applicable to Tylan General in connection with any such registration,
qualification or compliance, and Tylan General will reimburse each such
Holder, each of its officers and directors, and each person controlling
such Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that Tylan General will not be liable
in any such case to the extent that any such claim, loss, damage, liability
or expense arises out of or is based on any untrue statement or omission or
alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to Tylan General by such
Holder, controlling person or underwriter and specifically for use therein.
Notwithstanding the foregoing, as far as the foregoing indemnity relates to
any untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but eliminated or remedied in
the amended prospectus on file with the SEC at the time the registration
statement becomes effective or in the final prospectus filed with the SEC
pursuant to Rule 424(b), the
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indemnity agreement herein shall not inure to the benefit of any
underwriter or, if there is no underwriter, any Holder if a copy of the
final prospectus filed pursuant to Rule 424(b) was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Securities Act.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification
or compliance is being effected, indemnify Tylan, each of its directors and
officers, each underwriter, if any, of Tylan General's securities covered
by such registration, qualification or compliance, each person who controls
Tylan General or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder including Registrable Securities
in such registration, each of its officers and directors and each person
controlling such other Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement
(or alleged untrue statement) of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, and will reimburse Tylan General, such other Holders, or
such directors, officers, persons, underwriters or control persons for any
legal or any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such
untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering
circular or other document in reliance upon and in conformity with written
information furnished to Tylan General by such Holder specifically for use
therein. Notwithstanding the foregoing, the liability of each Holder under
this subsection (b) shall be limited in an amount equal to the initial
public offering price of the shares sold by such Holder, unless such
liability arises out of or is based on willful conduct by such Holder.
Notwithstanding the foregoing, as far as the foregoing indemnity relates to
any untrue statement (or alleged untrue statement) or omission (or alleged
omission) made in the preliminary prospectus but eliminated or remedied in
the amended prospectus on file with the SEC at the time the registration
statement becomes effective or in the final prospectus filed pursuant to
Rule 424(b), the indemnity agreement herein shall not inure to the benefit
of Tylan General, any underwriter or any other Holder if a copy of the
final prospectus filed pursuant to Rule 424(b) was not furnished to the
person or entity asserting the loss, liability, claim or damage at or prior
to the time such furnishing is required by the Securities Act, unless
delivery of such final prospectus was the responsibility of the
Indemnifying Party (as hereinafter defined) hereunder.
(c) Each party entitled to indemnification under this Section 8.9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought
and shall permit the Indemnifying Party to assume the defense of any such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval
shall not unreasonably be withheld), and the Indemnified Party may
participate in such defense at such party's expense. The failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Article 8 unless the
failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action. The Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest
or separate and different defenses. No Indemnifying Party, in the defense
of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation. No Indemnified
Party shall consent to entry of any judgment or enter into any settlement
without the consent of each Indemnifying Party.
(d) If the indemnification provided for in this Section 8.9 is
unavailable to an Indemnified Party in respect of any losses, claims,
damages or liabilities referred to therein, then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such
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Indemnified Party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by Tylan General, all shareholders offering
securities in the offering (the "Selling Shareholders") and the
underwriters of the offering (the "Underwriters") from the offering of
Tylan General securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of Tylan General, the Selling
Shareholders and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by Tylan General, the Selling Shareholders and the Underwriters
shall be deemed to be in the same proportion as the net proceeds from the
offering (before deducting expenses) received by Tylan General and the
Selling Shareholders, respectively, and the underwriting discounts and
commissions received by the Underwriters bear to the aggregate price of the
offering to the public. The relative fault of Tylan General, the Selling
Shareholders and the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
material fact or the omission or alleged omission to state a material fact
relates to information supplied by Tylan General, the Selling Shareholders
or the Underwriters and the parties' relevant intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. It is agreed that it would not be just and equitable if
contribution pursuant to this Section 8.9(d) were based solely upon the
number of entities from whom contribution was requested or by any other
method of allocation which does not take into account the equitable
considerations referred to above in this Section 8.9(d). The amount paid or
payable by an Indemnified Party as a result of the losses, claims, damages
and liabilities referred to above in this Section 8.9(d) shall be deemed to
include any legal or other expenses reasonably incurred by such Indemnified
Party in connection with investigating, preparing or defending any such
action or claim, subject to the provisions of Section 8.9(c) hereof.
Notwithstanding the provisions of this Section 8.9(d), no Selling
Shareholder shall be required to contribute any amount or make any other
payments under this Agreement which in the aggregate exceed the proceeds
received by such Selling Shareholder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11 of the Securities Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
8.10 Information by Holder. Each Holder holding Registrable Securities
included in any registration shall furnish to Tylan General such information
regarding such Holder, the Registrable Securities held by such Holder and the
distribution proposed by such Holder as Tylan General may request in writing and
as shall be required in connection with any registration, qualification or
compliance referred to in this Article 8.
8.11 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of the Restricted Securities to the public without registration, Tylan General
agrees to use its best efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) file with the SEC in a timely manner all reports and other
documents required of Tylan General under the Securities Act and the
Exchange Act; and
(iii) so long as a Holder owns any Restricted Securities, to furnish
to such Holder forthwith upon request a written statement by Tylan General
as to its compliance with the reporting requirements of said Rule 144 and
of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of Tylan General, and such other reports and
documents of Tylan General as such Holder may reasonably request in
availing itself of any rule or regulation of the SEC allowing such Holder
to sell any such securities without registration.
8.12 Transfer of Registration Rights. The rights to cause Tylan General
to register securities granted to a Holder under this Article 8 may be assigned
to a transferee or assignee in connection with any transfer or assignment of
Registrable Securities by such Holder provided that such transfer may otherwise
be effected in accordance with applicable securities laws.
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<PAGE> 35
8.13 Termination of Registration Rights. The right of any Holder to request
registration or inclusion in any registration pursuant to Section 8.5 or 8.6
shall terminate on the earlier of (a) such date as all shares of Registrable
Securities held by such Holder may immediately be sold under Rule 144 during any
90-day period or (b) the third anniversary of the Closing Date.
8.14 Volume Limitation on Sale of Registrable Securities Included in Any
Registration Hereunder. Notwithstanding anything to the contrary in this Article
8, during any 90-day period no Holder shall be entitled to sell Registrable
Securities registered or included in any registration pursuant to Section 8.5 or
8.6 in excess of the number of shares which, absent such registration, could be
sold by such Holder under Rule 144(e), assuming for purposes of this calculation
that such Holder satisfies the holding period for restricted securities set
forth in Rule 144(d) and the other requirements of Rule 144.
9. INDEMNITY BY SHAREHOLDERS
9.1 Indemnity. In connection with the Merger, each Shareholder shall, on
a pro rata basis based on the Fully Diluted Span Common Shares Outstanding,
indemnify Tylan General, Tylan General Sub and Span against any loss, expense,
liability, or other damages, including the reasonable costs of investigation,
interest, penalties and attorney's and accountant's fees ("Damages"), incurred
in connection with or arising from or attributable to any breach or inaccuracy
of any representation or warranty made by Span or the Shareholders herein or any
breach or failure to perform any agreement or covenant of Span or the
Shareholders herein.
9.2 Threshold. The Shareholders shall not be required to make any
indemnification payment pursuant to Section 9.1 for any Damages until such time
as the total amount of all Damages that have been directly or indirectly
suffered or incurred by any one or more of Tylan General, Tylan General Sub and
Span, or to which any one or more of Tylan General, Tylan General Sub and Span
has or have otherwise become subject exceeds $100,000 in the aggregate. At such
time as the total amount of such Damages exceeds $100,000 in the aggregate,
Tylan General, Tylan General Sub and Span shall be entitled to be indemnified
against the full amount of such Damages (and not solely the amount that exceeds
$100,000).
9.3 Expiration of Indemnity. Tylan General, Tylan General Sub and Span
may make no claim for indemnification for Damages after January 31, 1997 (the
"Claim Deadline"). The expiration of the period within which claims may be made
shall not affect any rights of Tylan General, Tylan General Sub and Span with
respect to claims made prior to the Claim Deadline.
9.4 Fraud. Notwithstanding any provision in this Agreement to the
contrary, the liability of a shareholder for fraud shall be subject only to
applicable statutes of limitations, and any claim against any shareholder
alleging fraud need not be presented by the Claim Deadline.
9.5 Survival of Representations and Warranties. Other than disclosures
set forth in the Schedules hereto or in the compliance certificate to be
delivered at Closing pursuant to Section 6.2 hereof, no disclosure by Span nor
any investigation by or on behalf of Tylan General or Tylan General Sub with
respect to Span shall be deemed to affect Tylan General's or Tylan General Sub's
reliance on the representations, warranties, covenants or agreements contained
herein or to waive Span's, Tylan General's or Tylan General Sub's rights to
indemnity as provided herein for the breach or inaccuracy or failure to perform
or comply with any representation, warranty, covenant or agreement of Span. The
indemnity obligations of the Shareholders under this Article 9 (and the
representations, warranties, covenants and agreements of Span and the
Shareholders) shall survive the Closing until the Claim Deadline.
9.6 Merger Consideration Adjustments. Any amount paid by the Shareholders
to Tylan General, Tylan General Sub or Span pursuant to this Article 9 shall be
an adjustment to the consideration paid to the Shareholders in connection with
the Merger.
9.7 Shareholders' Agent.
(a) Each of the Shareholders hereby constitutes and appoints Don E.
Whitson (the "Shareholders' Agent") as his agent and attorney-in-fact to
take such action on behalf of the Shareholder, and to exercise such rights,
power and authority as are authorized, delegated and granted to the
Shareholders'
34
<PAGE> 36
Agent under this Agreement in connection with the transactions contemplated
hereby, to give and receive notices and communications, and to take all
actions necessary or appropriate in the judgment of the Shareholders' Agent
for the accomplishment of the foregoing, including without limitation the
right to resolve any disagreement or disputes, and to exercise such rights,
power and authority as are incidental thereto. A decision, act, consent,
instruction or determination of the Shareholders' Agent shall constitute a
decision of all Shareholders and shall be final, binding and conclusive
upon each of the Shareholders. The Shareholders' Agent shall not be liable
for any act done or omitted hereunder as Shareholders' Agent unless
resulting from gross negligence or willful misconduct. The Shareholders
shall jointly and severally indemnify the Shareholders' Agent and hold him
harmless against any loss, liability or expense incurred without negligence
or bad faith on the part of such Shareholders' Agent and arising out of or
in connection with the acceptance or administration of his duties
hereunder. No bond shall be required of the Shareholders' Agent, and the
Shareholders' Agent shall receive no compensation for his services.
(b) The provisions set forth in this Section 9.7 shall have no effect
on the obligations of either the Shareholders' Agent or the Shareholders to
Tylan General, Tylan General Sub or Span, and such provisions are solely
for the purposes of determining the rights and obligations of the
Shareholders, on the one hand, and the Shareholders' Agent, on the other,
vis-a-vis each other and shall in no way impose any obligations on Tylan
General, Tylan General Sub or Span other than those explicitly set forth in
this Agreement. In particular, notwithstanding in any case any notice
received by Tylan General, Tylan General Sub or Span to the contrary, Tylan
General, Tylan General Sub or Span shall be fully protected in relying upon
and shall be entitled (i) to rely upon actions, decisions, consents,
instructions and determinations of the Shareholders' Agent in his capacity
as the Shareholders' Agent, and (ii) to assume that all actions, decisions,
consents, instructions and determinations of the Shareholders' Agent are
fully authorized by the Shareholders, and all such actions, decisions,
consents, instructions and determinations shall be binding and conclusive
upon each Shareholder.
(c) In the event that Don E. Whitson is unavailable to act as the
Shareholders' Agent, or becomes incapable (through death or legal
incapacity) of acting as the Shareholders' Agent, then Leo E. Whitson shall
become the Shareholders' Agent, and, in connection therewith, is authorized
to take such action on behalf of the Shareholders and to exercise such
rights, power and authority as are authorized, delegated and granted to
such Shareholders' Agent under this Agreement in connection with the
transactions contemplated hereby, and to exercise such rights, power and
authority as are incidental thereto.
10. INDEMNITY BY TYLAN GENERAL
10.1 Indemnity. In connection with the Merger, Tylan General shall
indemnify the Shareholders against any Damages incurred in connection with or
arising from or attributable to any breach or inaccuracy of any representation
or warranty made by Tylan General or Tylan General Sub herein or any breach or
failure to perform any agreement or covenant of Tylan General or Tylan General
Sub herein.
10.2 Threshold. Tylan General shall not be required to make any
indemnification payment pursuant to Section 10.1 for any Damages until such time
as the total amount of all Damages that have been directly or indirectly
suffered or incurred by any one or more of the Shareholders, or to which any one
or more of the Shareholders has or have otherwise become subject exceeds
$100,000 in the aggregate. At such time as the total amount of such Damages
exceeds $100,000 in the aggregate, the Shareholders shall be entitled to be
indemnified against the full amount of such Damages (and not solely the amount
that exceeds $100,000).
10.3 Expiration of Indemnity. The Shareholders may make no claim for
indemnification for Damages after the Claim Deadline. The expiration of the
period within which claims may be made shall affect any rights of the
Shareholders with respect to claims made prior to the Claim Deadline.
10.4 Fraud. Notwithstanding any provision in this Agreement to the
contrary, the liability of Tylan General for fraud shall be subject only to
applicable statutes of limitations, and any claim against Tylan General alleging
fraud need not be presented by the Claim Deadline.
35
<PAGE> 37
10.5 Survival of Representations and Warranties. The indemnity
obligations of Tylan General under this Article 10 (and the representations,
warranties, covenants and agreements of Tylan General and Tylan General Sub)
shall survive the Closing until the Claim Deadline.
11. EMPLOYEE MATTERS
11.1 Employees. Each employee of Span immediately before the Closing
(each, a "Span Employee") shall continue to be employed by Span or Tylan General
after the Effective Date; provided that, except as provided in Section 5.2(i)
hereof or pursuant to existing employment agreements between Ronald L. Ewers and
Bradley L. Busch and Ocala, such employment shall be on an at-will basis, and
nothing herein shall obligate Span or Tylan General to continue to employ any
Span Employee for any period of time; and provided further that with respect
solely to the employee benefit plans and arrangements of Tylan General, the term
of each Span Employee's employment at Span will be added to his or her term of
employment at Tylan General or the Surviving Corporation.
12. TERMINATION OF AGREEMENT
12.1 Termination. At any time prior to the Closing Date, this Agreement
may be terminated:
(a) by mutual consent of all the parties;
(b) by Tylan General if a majority of the members of the Board of
Directors of Tylan General does not approve the results of Tylan General's
pre-acquisition investigation and review as required in Section 6.1;
(c) by Tylan General if (i) there has been a material breach by Span
of any covenant, representation or warranty contained in this Agreement,
(ii) Tylan General has notified Span in writing of the existence of such
breach, and (iii) Span has failed to cure such breach within ten days after
receiving such notice;
(d) by Span if (i) there has been a material breach by Tylan General
of a covenant, representation or warranty contained in this Agreement, (ii)
Span has notified Tylan General in writing of the existence of such breach,
and (iii) Tylan General has failed to cure such breach within ten days
after receiving such notice; or
(e) by either Tylan General or Span if (i) there shall be a
non-appealable order of a federal or state court in effect preventing
consummation of the Merger, (ii) there shall be any action taken, or any
statute, rule, regulations or order enacted, promulgated, issued or deemed
applicable to the Merger, by any governmental entity that would make
consummation of the Merger illegal, (iii) upon a vote at a duly held
meeting of shareholders or any adjournment thereof, any required approval
of the holders of Span common stock or the holders of Tylan General Common
Stock shall not have been obtained, or (iv) it shall be after September 30,
1996.
12.2 Effect of Termination. If this Agreement shall be terminated as
provided in Section 12.1, this Agreement shall forthwith become void and there
shall be no liability on the part of any party hereto to any other party except
for (a) if appropriate, payment of legal fees pursuant to Section 13.3 and (b)
any damages for a material breach of this Agreement.
12.3 Costs and Expenses. Whether or not the Merger is consummated, all
costs and expenses incurred in connection with this Agreement will be paid by
the party incurring such expense; provided, however, that if the Merger is
consummated, the Shareholders shall indemnify and hold harmless Tylan General,
Tylan General Sub and Span from any costs or expenses incurred by any
Shareholder and for all costs and expenses of Span in excess of $450,000, which
amount may be increased only with the prior written approval of Tylan General.
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<PAGE> 38
12.4 Extension of Time; Waivers. At any time prior to the Closing Date:
(a) Tylan General and Tylan General Sub may (i) extend the time for
the performance of any of the obligations or other acts of Span, and (ii)
waive compliance with any of the agreements or conditions contained herein
to be performed by Span. Any agreement on the part of Tylan General and
Tylan General Sub to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of Tylan General and
Tylan General Sub; and
(b) Span may (i) extend the time for the performance of any of the
obligations or other acts of Tylan General and/or Tylan General Sub, and
(ii) waive compliance with any of the agreements or conditions contained
herein to be performed by Tylan General and/or Tylan General Sub. Any
agreement on the part of Span to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of
Span.
13. MISCELLANEOUS
13.1 Amendment. This Agreement may be amended with the approval of the
Board of Directors of Tylan General, Tylan General Sub and Span at any time
before or after approval hereof by the shareholders of Span, but, after any such
shareholder approval, no amendment shall be made which would change the
principal terms of this Agreement without the further approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
13.2 Entire Agreement; Counterparts; Applicable Law. This Agreement and
the agreements contemplated by the exhibits hereto (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter hereof (excluding
the Strategic Sales Alliance Agreement and all international distribution
agreements of Span), (b) may be executed in several counterparts, each of which
will be deemed an original and all of which shall constitute one and the same
instrument and (c) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of California as applied to
contracts entered into and to be performed entirely within California.
13.3 Attorneys' Fees. In any action at law or suit in equity to enforce
this Agreement or the rights of the parties hereunder, the prevailing party in
such action or suit shall be entitled to receive a reasonable sum for its
attorneys' fees and all other reasonable costs and expenses incurred in such
action or suit.
13.4 Assignability. This Agreement shall be binding upon, and shall be
enforceable by and inure to the benefit of, the parties named herein and their
respective successors; provided, however, that this Agreement may not be
assigned by any party without the prior written consent of the other parties,
and any attempted assignment in violation of this Section 13.4 shall be void and
of no effect.
37
<PAGE> 39
13.5 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if delivered by hand or mailed
by certified or registered mail:
<TABLE>
<S> <C>
To Span or a Shareholder: with a copy to:
Span Instruments, Inc. Gardere & Wynne, L.L.P.
P.O. Box 860709 1601 Elm Street, Suite 3000
Plano, Texas 75086 Dallas, Texas 75201
Attn: Don E. Whitson Attn: Richard L. Waggoner
or
Span Instruments, Inc.
2201 Avenue K
Plano, Texas 75074
Attn: Don E. Whitson
Tylan General or Tylan
General Sub: with a copy to:
Tylan General, Inc. Cooley Godward Castro Huddleson & Tatum
15330 Avenue of Science 4365 Executive Drive, Suite 1100
San Diego, California 92128 San Diego, California 92121-2128
Attn: David J. Ferran Attn: D. Bradley Peck
</TABLE>
or to such other address at which any party may be registered mail notify the
other party, and shall be deemed given on the date on which hand-delivered or on
the third business day following the date on which mailed.
13.6 Titles. The titles and captions of the sections and paragraphs of
this Agreement are included for convenience of reference only and shall have no
effect on the construction or meaning of this Agreement.
13.7 Cooperation. Tylan General, Tylan General Sub and Span each agree to
execute and deliver such other documents, certificates, agreements and other
writings and to take such other actions as may be necessary or desirable in
order to consummate expeditiously or implement the transactions contemplated by
this Agreement.
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<PAGE> 40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement and
Plan of Reorganization as of the date first written above.
TYLAN GENERAL, INC.
By:
------------------------------------
David J. Ferran
Chairman of the Board, President and
Chief
Executive Officer
TYLAN GENERAL ACQUISITION
SUBSIDIARY, INC.
By:
------------------------------------
David L. Stone
Executive Vice President and Chief
Financial Officer
SPAN INSTRUMENTS, INC.
By:
------------------------------------
Don E. Whitson
President and Chief Executive
Officer
SHAREHOLDERS
--------------------------------------
Don E. Whitson
--------------------------------------
Leo E. Whitson
--------------------------------------
Sam R. Crowe
--------------------------------------
Tommy Gray
--------------------------------------
Marguerite Whitson
--------------------------------------
Robert M. Lipsky
39
<PAGE> 41
--------------------------------------
Robert J. Barraclough
--------------------------------------
John Jul
--------------------------------------
John Jordon
--------------------------------------
George A. Yurch
--------------------------------------
Brian Day
--------------------------------------
Kaveh Zarkar
--------------------------------------
John Rabbitt
40
<PAGE> 42
EXHIBIT 4.2(H)
CONTINUITY OF INTEREST CERTIFICATE
The undersigned is aware that pursuant to an Agreement and Plan of
Reorganization, dated as of July , 1996 (the "Reorganization Agreement"), made
and entered into by and among TYLAN GENERAL, INC., a Delaware corporation
("Tylan"), TYLAN GENERAL ACQUISITION SUBSIDIARY, INC., a Delaware corporation
("Tylan Sub"), SPAN INSTRUMENTS, INC., a Texas corporation ("Span"), and the
shareholders of Span, Tylan Sub will merge with and into Span (the "Merger").
Unless otherwise indicated, capitalized terms used but not defined herein have
the meanings set forth in the Reorganization Agreement.
1. The undersigned represents as follows:
(a) The undersigned currently is the owner of that number of Span
Common Shares set forth below and (i) has held such Span Common Shares at
all times since , 19 and (ii) did not acquire any of such
Span Common Shares in contemplation of the Merger;
(b) The undersigned has not engaged in a Sale (as defined below) of
any Span Common Shares (i) at any time or (ii) in contemplation of the
Merger;
(c) The undersigned has no current plan or intention (a "Plan") to
engage in a sale, exchange, transfer, distribution, redemption or reduction
in any way of the undersigned's risk of ownership by short sale or
otherwise, or other disposition, directly or indirectly (such actions being
collectively referred to herein as a "Sale") of a majority of the shares of
Tylan Common Stock to be received by the undersigned pursuant to the
Merger;
(d) Except to the extent written notification to the contrary is
received by Span from the undersigned prior to the Closing Date, the
representations contained herein shall be true and correct at all times
from the date hereof through the Closing Date; and
(e) The undersigned has consulted with such legal and financial
counsel as the undersigned has deemed appropriate in connection with the
execution of this Certificate.
(f) The undersigned understands that Tylan, Tylan Sub, Span and their
respective shareholders as well as their respective counsel and accounting
firms will be relying on (a) the truth and accuracy of the representations
contained herein and (b) the undersigned's performance of the obligations
set forth herein.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
1st day of July, 1996.
--------------------------------------
Shareholder signature
--------------------------------------
(Print name)
Span Common Shares Beneficially
Owned:
1-1
<PAGE> 43
EXHIBIT 4.2(O)
AFFILIATE AGREEMENT
This Affiliate Agreement (the "Agreement") is entered into as of July 1,
1996, between TYLAN GENERAL, INC., a Delaware corporation ("Tylan"), and the
undersigned affiliate ("Affiliate") of SPAN INSTRUMENTS, INC., a Texas
corporation ("Span").
RECITALS
A. Pursuant to that certain Agreement and Plan of Reorganization (the
"Reorganization Agreement"), dated as of July , 1996, by and among Tylan,
TYLAN GENERAL ACQUISITION SUBSIDIARY, INC., a Delaware corporation ("Tylan
Sub"), Span and the shareholders of Span, Tylan Sub will merge with and into
Span (the "Merger").
B. As a result of the Merger and certain related transactions, the
shareholders of Span will receive shares (the "Shares") of Tylan Common Stock
(as defined in the Reorganization Agreement). Affiliate understands that he may
be deemed an "affiliate" of Span as such term is defined in paragraphs (c) and
(d) of Rule 145 under the Securities Act of 1933, as amended (the "Act") ("Rule
145"), and the Securities and Exchange Commissions Accounting Series Release
Nos. 130 and 135 (the "Pooling Rules"), as amended, and as such Affiliate may
only transfer, sell or dispose of the Shares in accordance with Rule 145, this
Agreement and the Pooling Rules.
C. Affiliate understands that the representations, warranties and covenants
set forth herein will be relied upon by Tylan, Tylan Sub and Span, and their
respective counsel and accounting firms.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Capitalized terms used in this Agreement and not otherwise defined shall
have the meanings given them in the Reorganization Agreement.
2. Affiliate represents, warrants, understands and agrees that:
(a) Affiliate has full power and capacity to execute and deliver this
Agreement and to make the representations, warranties and agreements herein
and to perform its obligations hereunder.
(b) Affiliate has carefully read this Agreement and has discussed with
counsel, to the extent Affiliate felt necessary, the requirements,
limitations and restrictions on his ability to sell, transfer or otherwise
dispose of the Shares he may receive and fully understands the
requirements, limitations and restrictions this Agreement places upon
Affiliate's ability to transfer, sell or otherwise dispose of the Shares.
(c) If Affiliate has executed a Shareholder Agreement and a Continuity
of Interest Certificate (the "Other Agreements"), he understands and agrees
to abide by all restrictions contained therein.
(d) Affiliate will not, publicly or privately, sell, transfer or
otherwise dispose of, or reduce Affiliate's interest in or risk relating
to, any Shares held by Affiliate until such time as the financial results
covering at least 30 days of post-Closing combined operations of Tylan have
been published by Tylan (within the meaning of the Pooling Rules).
(e) Until the earlier of (i) the Closing Date or (ii) the termination
of the Reorganization Agreement, Affiliate will not sell, transfer or
otherwise dispose of, or reduce Affiliate's interest in or risk relating
to, any Span Common Shares held by Affiliate.
(f) Subject to Section 2(d) above, Affiliate will not sell, pledge,
transfer or otherwise dispose of any of the Shares held by Affiliate unless
at such time either (i) such transfer shall be in conformity with the
provisions of Rule 145, (ii) Affiliate shall have furnished to Tylan an
opinion of counsel reasonably satisfactory to Tylan, to the effect that no
registration under the Act would be required in connection with the
proposed offer, sale, pledge, transfer or other disposition, (iii) a
registration statement under the Act
2-1
<PAGE> 44
covering the proposed offer, sale, pledge, or other disposition shall be
effective under the Act, or (iv) if Affiliate is a partnership, such
transfer shall be a pro rata distribution from the Affiliate to its
partners without receipt of consideration.
3. Affiliate understands and agrees that Tylan is under no obligation to
register the sale, transfer or other disposition of the Shares or to take any
other action necessary in order to make compliance with an exemption from
registration available.
4. Affiliate further represents that it is the beneficial owner of the Span
Common Shares set forth below, or, if not set forth below, that it is not the
beneficial owner of any Span Common Shares.
5. Each party hereto acknowledges that (i) it will be impossible to measure
in money the damage to Tylan if Affiliate fails to comply with any of the
obligations imposed by this Agreement, (ii) every such obligation is material
and (iii) in the event of any such failure, Tylan will not have an adequate
remedy at law or damages and, accordingly, each party hereto agrees that
injunctive relief or other equitable remedy, in addition to remedies at law or
damages, is an appropriate remedy for any such failure.
6. This Agreement shall be deemed a contract made under, and for all
purposes shall be construed in accordance with, the laws of the State of
California.
7. This Agreement shall be binding upon, enforceable by and inure to the
benefit of the parties named herein and their respective successors; this
Agreement may not be assigned by any party without the prior written consent of
Tylan. Any attempted assignment not in compliance with this Section 7 shall be
void and have no effect.
8. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together shall
constitute one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first written above.
TYLAN GENERAL, INC.
By:
AFFILIATE
--------------------------------------
Affiliate signature
--------------------------------------
(Print name)
Address:
--------------------------------------
--------------------------------------
Span Common Shares Beneficially
Owned:
2-2
<PAGE> 45
EXHIBIT 4.2(P)
INVESTMENT LETTER
This Investment Letter (the "Investment Letter") is entered into as of July
3, 1996, between TYLAN GENERAL, INC., a Delaware corporation ("Tylan") and the
undersigned shareholder ("Shareholder") of SPAN INSTRUMENTS, INC., a Texas
corporation ("Span").
Shareholder acknowledges that he has received and reviewed (i) a copy of
that certain Agreement and Plan of Reorganization (the "Reorganization
Agreement") dated as of the date hereof, by and among Tylan, TYLAN GENERAL
ACQUISITION SUBSIDIARY, INC., a Delaware corporation ("Tylan Sub"), Span,
Shareholder and all of the other shareholders of Span, pursuant to which Tylan
Sub will merge with and into Span (the "Merger"), so that upon consummation of
the Merger, Tylan Sub will cease to exist and Span will become a wholly owned
subsidiary of Tylan; (ii) Tylan's Annual Report on Form 10-K for the year ended
October 29, 1995; (iii) Tylan's definitive Proxy Statement for the Annual
Meeting held on April 4, 1996; (iv) Tylan's Quarterly Report on Form 10-Q for
the quarter ended January 28, 1996; and (v) Tylan's Quarterly Report on Form 10-
Q for the quarter ended April 28, 1996 (collectively, the "Disclosure
Documents").
1. Defined Terms. Capitalized terms used in this Investment Letter and not
otherwise defined shall have the meanings given them in the Reorganization
Agreement.
2. Acknowledgments and Understandings of the Shareholder.
(a) Unregistered Stock. Shareholder is fully aware that the shares of
Tylan Common Stock (the "Shares") he will receive pursuant to the Merger are
being received under an exemption from registration provided for in Section 4(2)
of the Securities Act, that he is acquiring the Shares without being offered or
furnished any offering literature or prospectus other than the Disclosure
Documents, that this transaction has not been approved or reviewed by the U.S.
Securities and Exchange Commission or by any administrative agency charged with
the administration of the securities law of any state, and that financial
statements and other documents pertaining to Tylan and Span have been made
available to Shareholder and his representatives, including his attorney and
accountant.
(b) Rule 144. Shareholder is fully aware that because the issuance of the
Shares has not been registered under the Securities Act, such Shares must be
held indefinitely unless their resale or other disposition is subsequently
registered under the Securities Act or an exemption from such registration is
available. Shareholder is aware of the provisions of Rule 144 promulgated under
the Securities Act which permits limited resale of shares purchased in a private
placement subject to the satisfaction of certain conditions, including, among
other things, the existence of a public market for the shares, the availability
of certain current public information about the issuer, the resale occurring not
less than two years after an exchange, the sale being through a "broker's
transaction" or in transactions directly with a "market maker" (as provided by
Rule 144(f)) and the number of shares being sold during any three-month period
not exceeding specified limitations (unless the sale is within the requirements
of Rule 144(k)).
(c) No Duty to Register. Shareholder realizes that, in the absence of the
availability of Rule 144 under the Securities Act, any disposition by him of the
Shares may require compliance with an exemption under the Securities Act or a
registration under the Securities Act, and that Tylan is under no obligation,
except as explicitly provided for in Article 8 of the Reorganization Agreement,
to take any action to make any such registration or exemption so available.
(d) Experience. Shareholder has such knowledge and experience in financial and
business matters that he is capable of evaluating the merits and risks of the
Merger and the transactions related thereto.
(e) Investment. Shareholder is acquiring the Shares for investment for his
own account and not with a view to, or for resale in connection with, any
unregistered distribution thereof, and he has no current intention to sell,
convey, dispose of or otherwise distribute any interest in or risk related to
the Shares. Shareholder
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<PAGE> 46
understands that the Shares he shall receive have not been registered under the
Securities Act by reason of a specific exemption from the registration
provisions of the Securities Act which depends upon, among other things, the
bona fide nature of the investment intent as expressed herein.
(f) Risk Awareness. Shareholder confirms that he understands and has fully
considered for purposes of this investment the risks of this investment and that
(i) this investment is suitable only for an investor who is able to bear the
economic consequences of losing his entire investment, (ii) the Shares are a
speculative investment which involves a high degree of risk of loss by
Shareholder of his investment therein, and (iii) there are substantial
restrictions on the transferability of the Shares, and accordingly, it may not
be possible for Shareholder to liquidate his investment in the case of
emergency.
(g) Ability to Bear Risk. Shareholder confirms that he is able (i) to bear
the economic risk of this investment, (ii) to hold the Shares for a substantial
period of time and (iii) presently to afford a complete loss of his investment.
(h) Opportunity to Investigate. Shareholder confirms that his
representatives and advisors have been given the opportunity to ask questions
of, and to receive answers from, persons acting on behalf of Span and Tylan
concerning the terms and conditions of the Merger and the business and prospects
of Span and Tylan, and to obtain any additional information, to the extent such
persons possess such information or can acquire it without unreasonable effort
or expense and without breach of confidentiality obligations, necessary to
verify the accuracy of the information set forth in the Disclosure Documents.
(i) Other Agreements. Shareholder acknowledges that transfer of the Shares
he is receiving is also subject to the restrictions contained in the
Reorganization Agreement, [Affiliate Agreement] and Continuity of Interest
Certificate executed by Shareholder.
(j) Reliance on Representations, Warranties and Acknowledgments. The
representations, warranties and acknowledgments of Shareholder herein (a) are
made by the undersigned with the intent that they may be relied upon in
determining his suitability as an investor in Tylan, (b) are true and accurate
as of the date of this Investment Letter and (c) shall be true and accurate as
of the date of delivery to and acceptance by Tylan and shall survive the sale of
the Shares; Shareholder acknowledges that certificates representing the Shares
may bear the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933. SUCH SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS THE
CORPORATION RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE
TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES
AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST BY
WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE
TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICES OF THE CORPORATION.
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IN WITNESS WHEREOF, the undersigned has hereby executed this Investment
Letter as of this day of July, 1996.
--------------------------------------
Address:
--------------------------------------
--------------------------------------
Tylan hereby accepts the foregoing Investment Letter subject to the terms
and conditions hereof as of the day of July, 1996.
TYLAN GENERAL, INC.
By:
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<PAGE> 48
EXHIBIT 5.2(I)
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and effective as of ,
1996 by and between TYLAN GENERAL, INC., a Delaware corporation (the "Company"),
and DONALD E. WHITSON (the "Employee"), with respect to the following facts.
A. The Board of Directors (the "Board") of the Company has determined that
the best interests of the Company would be served by Employee's employment by
the Company in the capacity of Vice Chairman and Chief Administrative Officer
and such mutually acceptable additional capacities as the Chief Executive
Officer may delegate to him from time-to-time during the term of this Agreement.
B. The Company wishes to assure itself of the continued benefit of
Employee's services provided in this Agreement, and Employee is willing to serve
in the employ of the Company solely within the terms hereof for said period.
C. The Company and Employee desire to define their respective rights and
obligations as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Employee to serve in the capacity
of Vice Chairman and Chief Corporate Officer of the Company, and Employee hereby
accepts such employment by the Company upon the terms and conditions set forth
herein.
2. POSITION AND RESPONSIBILITIES
(a) Duties. The Company shall employ Employee in the capacity of Vice
Chairman and Chief Administrative Officer and such other mutually acceptable
executive positions as the Chief Executive Officer may determine to be in the
best interests of the Company, and Employee shall serve as such for the term and
under other conditions hereinafter set forth. Employee shall devote his full
business time and attention to the performance of such services and to such
other services as may be necessarily requested by the Chief Executive Officer
that are consistent with those required of a Vice Chairman and Chief
Administrative Officer of a company. In this capacity as Vice Chairman and Chief
Administratiave Officer, Employee shall perform such duties and have such powers
and authority as are customary for the Vice Chairman and Chief Administrative
Officer of a company. The Employee shall report directly to and shall be
responsible to the Chief Executive Officer regarding his services. In the event
that, without his consent, Employee is assigned to a position involving a
different title or materially lesser authority and responsibility, then Employee
shall have the option, exercisable for 30 days following notice to Employee of
such assignment or new title, to consider that this Agreement has been
terminated without cause in which case Employee shall be entitled to the
benefits set forth in Section 8(c) herein.
(b) Competitive Activity. Except upon the prior written consent of the
Chief Executive Officer, Employee, during the term of his employment hereunder,
will not accept any other employment of any nature and will not engage, directly
or indirectly, in any other business activity (whether or not pursued for
pecuniary advantage) that is or may be competitive with, or that might place him
in a competing position to that of the Company or any other corporation or
entity that directly or indirectly controls, is controlled by or is under common
control with the Company.
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<PAGE> 49
3. TERM OF EMPLOYMENT
The effective date of this Agreement shall be , 1996 (the
"Effective Date") and shall remain in effect until terminated pursuant to
Section 7.
4. WORKING FACILITIES
Employee shall be furnished with a private office, secretarial and other
necessary clerical and stenographic assistance, and such other facilities,
amenities and services as may at the time be generally furnished to executive
officers of the Company and as are appropriate for Employee's position and
adequate for the performance of his duties hereunder.
5. PLACE OF PERFORMANCE
In connection with this Agreement, Employee shall maintain an office at the
principal executive offices of Span Instruments, Inc. ("Span") in Plano, Texas.
6. SALARY, BONUS, EXPENSES AND BENEFITS
(a) Salary. The Company shall pay Employee an initial salary of $250,000
per year. Employee's salary shall be reviewed and revised (if appropriate) at
least annually by the Chief Executive Officer and shall be adjusted based upon
Employee's job performance, the Company's financial condition and performance
and the salary and compensation levels of executives in similar companies with
similar responsibilities. Furthermore, any salary payable to Employee after the
second anniversary of the Effective Date shall be determined in accordance with
the Company's compensation policy for senior management. Any increases in
Employee's salary pursuant to this Section 6(a) shall require approval by the
Compensation Committee of the Board of Directors of the Company (the
"Committee") (without the vote of the Employee if Employee is a member of such
committee).
(b) Bonus. The Company shall pay Employee an annual bonus of up to
twenty-five percent (25%) of Employee's annual salary for the immediately
preceding year. The Committee (without the vote of the Employee if Employee is a
member of such committee) shall determine in good faith the amount of such bonus
giving consideration to the Company's overall achievement of the goals set forth
in the Company's annual plan for the applicable fiscal year and Employee's
performance during the year. The Company shall pay such bonus no later than 45
days after the end of each fiscal year of the Company.
(c) Participation in Welfare and Benefit Plans. Employee shall be entitled
to participate in, personally and/or for the benefit of his family or other
beneficiaries, any welfare, insurance, pension, or other employee benefit plans
as are at the time made generally available to other executives of the Company.
Employee shall be eligible to receive during the term hereof all benefits for
which executives are eligible under every such plan or program to the extent
permissible under the general terms and provisions of such plans or programs and
in accordance with the provisions thereof.
(d) Vacation. Employee shall be entitled to six weeks' paid vacation time
each year, during which such time his compensation hereunder shall be paid in
full. Unless otherwise directed by the Chief Executive Officer, Employee shall
have the discretion to take vacation time on the dates as he determines to be
appropriate and not detrimental to the Company.
(e) Holidays, Leave Days, Etc. Employee shall be entitled to such
holidays, sick leave, leaves of absence and other absences as are at the time
made generally available to other executives of the Company of comparable tenure
and position.
(f) Automobile. During the term of this Agreement, the Company shall make
an automobile available to Employee under such terms and conditions as are
presently applied or as may be later applied to other executives of the Company
of comparable tenure and position. In connection therewith, the Company shall
bear all expenses relating to such automobile, including insurance, maintenance
and repair, gas and oil. Upon termination of this Agreement, the Company shall
offer Employee the right to purchase the automobile then
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<PAGE> 50
being operated by Employee at the depreciated value of such automobile or to
assume the Company's lease of such automobile and shall execute and deliver to
Employee all documentation necessary to establish Employee's ownership or
leasing of such automobile.
(g) Life Insurance. The Company shall pay for and provide life insurance
for each year of this Agreement for the benefit of Employee under the Company's
group life insurance plan.
(h) Health Insurance. The Company shall provide health insurance for
Employee under the Company's health insurance plan.
(i) Disability Insurance. The Company shall provide disability insurance
for Employee pursuant to the Company's directors' and officers' disability
policy according to the Company's policy established by the Committee.
(j) Reimbursement of Expenses. The Company shall pay or reimburse
Employee, on a monthly basis, for reasonable travel, entertainment, promotional
and other expenses incurred by Employee in the performance of his obligations
under this Agreement. Employee must submit timely detailed expense reports for
appropriate review prior to reimbursement.
(k) Tax, Legal and Financial Advice. The Company shall pay for the fees
and expenses of legal, tax and financial advisory, and income tax preparation
services for Employee in an aggregate amount not to exceed $1,500 for each year
of this Agreement; provided that no payment of any fees shall be made by the
Company for legal services obtained by Employee in connection with any dispute
with the Company regarding this Agreement.
(l) Other Fringe Benefits. Employee shall be entitled to any and all other
fringe benefits according to the Company's policy as set by the Committee.
7. TERMINATION
Employee's employment under this Agreement may be terminated by the Company
or Employee as herein provided, without further obligation or liability except
as expressly provided herein.
(a) Resignation, Death or Disability. Employee's employment hereunder may
be terminated at any time by Employee's resignation (other than a resignation
for good reason as provided in Section 7(d)), or by Employee's death or
disability. In the event Employee wishes to resign, he shall give the Company
not less than 30 days prior notice of such resignation, which notice shall
indicate the proposed resignation date. Following receipt of such notice, the
Company shall have the right to accelerate the date of Employee's resignation
and to cause his resignation to become effective at any time prior to the
resignation date set forth in Employee's original notice; provided, however,
that such acceleration or changed effective date of resignation shall not affect
in any manner the delivery of any benefits or payments to which Employee may be
entitled under Section 8 of this Agreement. For purposes of this Agreement,
disability shall be deemed to have occurred only after the following procedure
has been satisfied. If within 45 days after notice of proposed termination for
disability is given to Employee by the Company, Employee has not returned to the
performance of substantially all his duties, the Company may terminate
Employee's employment by giving notice of termination for disability. The notice
of proposed termination may only be given by the Company following Employee's
substantial and material absence from Employee's duties by reason of physical or
mental disability for a period of 120 calendar days.
(b) Termination For Cause. Employee's employment hereunder may be
terminated by the Company for cause; provided, however, that Employee shall be
given notice of the Company's findings of conduct by Employee amounting to cause
for such termination. Cause for termination under this Agreement shall be
limited to (i) Employee's personal dishonesty or gross misconduct; (ii) a
material breach of any material provision of this Agreement; (iii) Employee's
refusal or failure to act in accordance with any lawful, reasonable direction or
order of the Chief Executive Officer or the Board and such refusal or failure
results or is reasonably likely to result in a materially adverse effect on the
Company's business; (iv) conviction of any felony involving moral turpitude (not
including a conviction for operating a motor vehicle under the influence
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<PAGE> 51
of alcohol or any other motor vehicle violation if no bodily injury to a third
party is involved); (v) any chemical dependency or substance abuse resulting in
a continuous and material impairment of Employee's ability to perform his duties
under this Agreement; or (vi) the willful and continued failure by Employee to
substantially perform Employee's duties with the Company or its subsidiaries or
affiliates (other than any failure resulting from disability) after a written
demand identifies the manner in which the Company believes that Employee has not
substantially performed his duties. Termination of Employee's employment under
this Agreement for cause as set forth in clauses (i) or (iv) of the preceding
sentence shall be deemed to be effective upon delivery of notice thereof in
accordance with the provisions of Section 9(i) of this Agreement. Employee shall
have 30 days from the date notice is given for cause as set forth in clause
(ii), (iii), (v) or (vi) of the second sentence of this Section 7(b) to cure
such conduct.
(c) Termination Without Cause. The Company shall have the right,
exercisable at any time during the term of this Agreement upon written notice to
Employee, to terminate Employee's employment without cause upon 30 days prior
notice. If Employee is terminated without cause, he shall be entitled to receive
the severance benefits pursuant to Section 8(c) hereof subject to his full
compliance with said Section 8(c).
(d) Resignation for Good Reason. During the term hereof, Employee may
regard Employee's employment as being constructively terminated and may,
therefore, resign within 30 days of Employee's discovery of the occurrence of
one or more of the following events, any of which will constitute "good reason"
for such resignation:
(1) Without Employee's express written consent, the assignment to
Employee of any duties materially inconsistent with Employee's position,
duties, responsibilities and status with the Company;
(2) Without Employee's express written consent, the termination and/or
material reduction in Employee's facilities (including office space and
general location) and staff reporting available to Employee, unless such
reduction occurs as part of a company-wide action authorized by the Board
(including the vote of Employee) to reduce the Company's expenses;
(3) A reduction by the Company of Employee's base salary or of any
bonus compensation formula applicable to him unless in connection with (i)
an across-the-board reduction for all senior management of the Company,
(ii) a reduction after the second anniversary of the Effective Date in
order to make Employee's salary consistent with the Company's compensation
policy for senior management or (iii) a company-wide salary expense
reduction necessitated by poor financial performance of the Company, in any
case as determined by the Committee in its reasonable discretion;
(4) A failure by the Company to maintain any of the employee benefits
to which Employee is entitled at a level substantially equal to or greater
than the value of those employee benefits currently in effect through the
continuation of the same or substantially similar plans, programs and
policies; or the taking of any action by the Company or its affiliate(s)
that would materially affect Employee's participation in or reduce
Employee's benefits under any such plans, programs or policies, or deprive
Employee of any material fringe benefits enjoyed by Employee unless such
failure or reduction occurs as part of a company-wide action authorized by
the Board (including the vote of Employee if Employee is a Director of the
Company) to reduce the Company's expenses;
(5) The failure by the Company to permit Employee to take
substantially the same number of paid vacation days and leave to which
Employee is entitled;
(6) The Company or any affiliate(s) requiring Employee to be based
anywhere other than within 20 miles of Plano, Texas, except for required
travel on the Company's or an affiliate's business to an extent
substantially consistent with Employee's present business travel
obligations;
(7) Any termination of Employee's employment by the Company which is
not affected pursuant to the requirements of this Section 7 with respect to
death, disability or termination for cause;
(8) The failure of the Company to obtain the assumption of this
Agreement by any successor as contemplated in Section 9(e) hereof; and
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<PAGE> 52
(9) A material breach of any provision of this Agreement by the
Company.
In the event of the occurrence of any of the above listed events and in the
event Employee wishes to resign on the basis of occurrence of such event,
Employee shall give the Company notice of his proposed resignation, and the
Company shall have a period of 30 days following its receipt of such notice to
remedy the breach or occurrence giving rise to such proposed resignation. In the
event the Company fails to so remedy said breach or occurrence by expiration of
said 30-day period, Employee shall be deemed to have resigned from his
employment with the Company for good reason pursuant to this Section 7(d).
(e) Termination Obligations. Employee hereby acknowledges and agrees that
all personal property of the Company, including, without limitation, all books,
manuals, records, reports, notes, contracts, lists, and other documents,
proprietary information, copies of any of the foregoing, and equipment furnished
to or prepared by Employee in the course of or incident to his employment,
belong to the Company and shall be promptly returned to the Company upon
termination of his employment for any reason. Employee shall retain the rights
to remove all of his personal property from the premises of the Company and any
personal property of the Company as may be mutually agreed upon between the
Company and Employee.
8. PAYMENTS TO EMPLOYEE UPON TERMINATION.
(a) Death or Disability. In the event of Employee's death or disability,
all benefits generally available to the Company's executives as of the date of
such an event as determined by the Committee shall be payable to Employee or
Employee's estate, without reduction, in accordance with the terms of any plan,
contract, understanding or arrangement forming the basis for such payment,
including, but not limited to, payments under the plans identified in Section
6(c). Employee shall be entitled to such other payments as might arise from any
plan, contract, understanding or arrangement between Employee and the Company at
the time of any such event pursuant to Section 6(c) or 6(i) hereof.
(b) Termination for Cause or Resignation Without Good Reason. In the event
Employee is terminated by the Company for cause as provided in Section 7(b) or
Employee resigns for other than good reasons as defined in Section 7(d), neither
the Company nor an affiliate shall have any further obligation or liability of
any nature to Employee under this Agreement or otherwise.
(c) Termination Without Cause or Resignation For Good Reason. Upon the
occurrence of termination without cause, or resignation for good reason, as
defined in Section 7(d), Employee shall be entitled to receive the following:
(1) Severance Payment. The Company shall continue to pay to the
Employee his salary (i) until the date that is eighteen (18) months from
the effective date of this Agreement (the "Initial Period") and (ii) for
twelve (12) months following the later of (x) the date of Employee's actual
termination of employment and (y) termination of the Initial Period (the
"Severance Payment"). Such salary shall be determined with reference to the
salary in effect for the month in which the date of employment termination
occurs.
(2) Method of Payment. The Severance Payment shall be paid to
Employee in cash in one lump sum no later than thirty (30) days following
the actual date of termination.
(3) Payment in Lieu of Contract Damages. The Severance Payment shall
be in lieu of any further payments to the Employee and any further accrual
of benefits with respect to periods subsequent to the date of the
employment termination and shall constitute a full satisfaction and
discharge of any claims by Employee related to the Agreement or the
circumstances surrounding the termination of employment hereunder.
Notwithstanding the preceding sentence, neither the Severance Payment nor
any other payments under this Section 8(c) shall reduce or offset any
benefits the Employee may be entitled to under the specific terms of the
benefit plans of the Company.
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<PAGE> 53
9. GENERAL PROVISIONS
(a) Entire Agreement. The terms and provisions of this Agreement, together
with the terms and provisions of the Noncompetition Agreement dated the date
hereof between Employee and the Parent, shall constitute the entire
understanding between Employee and the Company with respect to the subject
matter hereof, and shall supersede any and all prior agreements or
understandings between Employee and the Company (or any affiliate of the
Company, including Span), whether written or oral.
(b) Amendments. This Agreement may be amended or modified only by a
written instrument executed by Employee and the Company.
(c) Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. In the event that any terms or provisions of this
Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(e) Assumption. The Company shall require any successor-in-interest
(whether direct or indirect or as a result of purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of the
Company to expressly assume and agree to perform the obligations under this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
(f) Assignability. The rights or obligations contained in this Agreement
shall not be assigned, transferred or divided in any manner by Employee or the
Company, without the prior written consent of the other; provided, however, that
nothing in this Section 9(f) shall preclude Employee from designating a
beneficiary to receive any benefits hereunder upon his death, or the executors,
administrators or other legal representatives of Employee or his estate from
assigning any rights hereunder to the person(s) entitled thereto.
Notwithstanding the foregoing, this Agreement shall be assignable by the Company
without Employee's consent and be binding on (i) any affiliate of the Company
and (ii) any entity which by purchase of assets, merger or otherwise, becomes a
successor to the business of the Company.
(g) Waiver of Breach. Any waiver of any breach of employment terms set
forth herein shall not be construed to be a continuing waiver or consent to any
subsequent breach on the part of Employee or the Company.
(h) Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation and
performance of any of the provisions of this Agreement.
(i) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if mailed by United States certified or registered mail,
prepaid, to the parties or their permitted assignees at the following addresses
(or at such other address as shall be given in writing by either party to the
other):
To: Tylan General, Inc.
9577 Chesapeake Drive
San Diego, California 92123
Attn: Chief Executive Officer
To: Donald E. Whitson
Span Instruments, Inc.
1947 Avenue K
Plano, Texas 75074
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<PAGE> 54
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the day and year first written above.
TYLAN GENERAL, INC.
By:
------------------------------------
Its: Chairman of the Board,
President
and Chief Executive Officer
EMPLOYEE
---------------------------------
Donald E. Whitson
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<PAGE> 55
EXHIBIT 5.2(J)
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and effective as of ,
1996, by and between TYLAN GENERAL, INC., a Delaware corporation (the "Parent"),
SPAN INSTRUMENTS, INC., a Texas corporation and a wholly-owned subsidiary of
Parent (the "Company"), and (the "Employee").
WHEREAS, the Company desires to assure itself of the continued services of
Employee, and Employee desires to be employed by the Company, under the terms
and conditions herein; and
WHEREAS, the Company, the Parent and Employee desire to define their
respective rights and obligations as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT; TERM
(a) Employment. The Company hereby agrees to continue to employ, and the
Parent hereby agrees to cause the Company to continue to employ, the Employee to
serve in the capacity of of the Company, and Employee hereby accepts
such continued employment by the Company upon the terms and conditions set forth
herein.
(b) Term. The effective date of this Agreement shall be , 1996
(the "Effective Date") and shall remain in effect until the earlier of
(i)____________or (ii) the date when Employee's employment is terminated
pursuant to Section 3 of this Agreement.
(c) Duties. During the term of this Agreement, Employee will, to the best
of his ability, devote substantially all of his business time and attention to
the performance of his duties hereunder, including such responsibilities as
shall be established by custom, by the Bylaws of the Company and, from time to
time, by the Board of Directors and/or senior management of the Company or the
Parent.
(d) Competitive Activity. Employee, during the term of his employment
hereunder, will not accept any other employment of any nature and will not
engage, directly or indirectly, in any other business activity (whether or not
pursued for pecuniary advantage) that is or may be competitive with, or that
might place him in a competing position to that of the Company or any other
corporation or entity that directly or indirectly controls, is controlled by or
is under common control with the Company.
2. SALARY AND BENEFITS
(a) Salary. The Company shall pay to Employee for the services to be
rendered hereunder a salary at an annual rate of $ , payable in
installments in accordance with Company policy, subject to increase in
accordance with the policies of the Company or the Parent, as determined by its
Board of Directors, in force from time to time (the "Salary").
(b) Benefits. Employee shall be eligible to participate in the Company's
employee benefit plans and incentive compensation programs for employees,
including the stock option plan of the Parent, subject in each case to the
generally applicable terms and conditions of the plan or program in question.
3. TERMINATION
(a) General. Employee's employment under this Agreement may be terminated
by the Company, the Parent or Employee as herein provided, without further
obligation or liability except as expressly provided herein. The Company shall
not provide or pay for any employee benefits or bonuses following the
termination of Employee's employment pursuant to Section 3(b), 3(c) or 3(d)
hereof, and the vesting of any stock
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<PAGE> 56
options granted to Employee during the term of his employment with the Company
shall cease on the date of such termination of employment.
(b) Resignation. Employee's employment hereunder may be terminated at any
time, upon 30 days prior notice, by Employee's resignation. If Employee resigns,
he shall be entitled to receive payments pursuant to Section 4(a) hereof,
subject to his full compliance with said Section 4(a).
(c) Death or Disability. Employee's employment shall terminate upon the
date of Employee's death or disability. For purposes of this Agreement,
disability shall be deemed to have occurred only after the following procedure
has been satisfied. If within 45 days after notice of proposed termination for
disability is given to Employee by the Company or the Parent, Employee has not
returned to the performance of substantially all his duties, the Company or the
Parent may terminate Employee's employment by giving notice of termination for
disability. The notice of proposed termination may only be given by the Company
or the Parent following Employee's substantial and material absence from
Employee's duties by reason of physical or mental disability for a period of 120
calendar days.
(d) Termination For Cause. Employee's employment hereunder may be
terminated by the Company or the Parent for cause; provided, however, that
Employee shall be given notice of the findings of conduct by Employee amounting
to cause for such termination. Cause for termination under this Agreement shall
be limited to (i) Employee's personal dishonesty or gross misconduct; (ii) a
material breach of any provision of this Agreement; (iii) Employee's refusal or
failure to act in accordance with any lawful, reasonable direction or order of
the Board of Directors or senior management of the Company or the Parent and
such refusal or failure results or is reasonably likely to result in a
materially adverse effect on the Company's or the Parent's business; or (iv) the
continued failure by Employee to perform Employee's duties with the Company or
its subsidiaries or affiliates, including the Parent (other than any failure
resulting from disability) in a manner consistent with Employee's position after
a written demand identifies the manner in which Employee's supervisor believes
that Employee has not substantially performed his duties. Termination of
Employee's employment under this Agreement for cause as set forth in clause (i)
of the preceding sentence shall be deemed to be effective upon delivery of
notice thereof in accordance with the provisions of Section 5(i) of this
Agreement. Employee shall have 30 days from the date notice is given for cause
as set forth in clause (ii), (iii) or (iv) of the second sentence of this
Section 3(d) to cure such conduct.
(e) Termination Without Cause. The Company and the Parent shall have the
right, exercisable at any time during the term of this Agreement upon written
notice to Employee, to terminate Employee's employment without cause upon 30
days prior notice. If Employee is terminated without cause, he shall be entitled
to receive severance benefits pursuant to Section 4(d) hereof, subject to his
full compliance with said Section 4(d).
(f) Termination Obligations. Employee hereby acknowledges and agrees that
all personal property of the Company or the Parent, including, without
limitation, all books, manuals, records, reports, notes, contracts, lists, and
other documents, proprietary information, copies of any of the foregoing, and
equipment furnished to or prepared by Employee in the course of or incident to
his employment, belong to the Company or the Parent, as the case may be, and
shall be promptly returned to the Company or the Parent, as the case may be,
upon termination of his employment for any reason. Employee shall retain the
rights to remove all of his personal property from the premises of the Company
and any personal property of the Company or the Parent as may be mutually agreed
upon between the Company or the Parent and Employee.
4. PAYMENTS TO EMPLOYEE UPON TERMINATION.
(a) Resignation. In the event of Employee's resignation, the Company shall
continue to pay Employee Employee's Salary for a period of six (6) months
commencing on the date of Employee's resignation. Such salary shall be
determined with reference to the salary in effect for the month in which the
date of employment termination occurs. The Company's obligation to make each
such monthly payment is conditioned on Employee's performance of four (4) hours
of consulting services per month for the Company; provided, however, that the
Company's obligation to make such monthly payments pursuant to this Section 4(a)
shall cease if Employee engages, at any time during the six (6) months following
his resignation, directly or
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indirectly, in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with, or that might place him in a
competing position to that of the Company or any other corporation or entity
that directly or indirectly controls, is controlled by or is under common
control with the Company.
(b) Death or Disability. In the event of Employee's death or disability,
all benefits generally available to the Company's employees as of the date of
such an event as determined by the Board of Directors of the Company shall be
payable to Employee or Employee's estate, without reduction, in accordance with
the terms of any plan, contract, understanding or arrangement forming the basis
for such payment.
(c) Termination For Cause. In the event Employee is terminated by the
Company or the Parent for cause as provided in Section 3(d) hereof, Employee
shall be entitled to receive the following:
(1) Termination Payment. The Company shall continue to pay to the
Employee his salary for six (6) months following the date of Employee's
actual termination of employment (the "Termination Payment"). Such salary
shall be determined with reference to the salary in effect for the month in
which the date of employment termination occurs.
(d) Termination Without Cause. In the event Employee is terminated by the
Company or the Parent without cause as provided in Section 3(e) hereof, Employee
shall be entitled to receive the following:
(1) Severance Payment. The Company shall continue to pay to the
Employee his salary (i) until the date that is twelve (12) months from the
effective date of this Agreement (the "Initial Period") and (ii) for six
(6) months following the later of (x) the date of Employee's actual
termination of employment and (y) termination of the Initial Period (the
"Severance Payment"). Such salary shall be determined with reference to the
salary in effect for the month in which the date of employment termination
occurs.
(e) Payment in Lieu of Contract Damages. The Termination Payment and the
Severance Payment shall be in lieu of any further payments to the Employee and
any further accrual of benefits with respect to periods subsequent to the date
of the employment termination and shall constitute a full satisfaction and
discharge of any claims by Employee related to the Agreement or the
circumstances surrounding the termination of employment hereunder.
Notwithstanding the preceding sentence, neither the Termination Payment, the
Severance Payment nor any other payments under this Section 4(e) shall reduce or
offset any benefits the Employee may be entitled to under the specific terms of
the benefit plans of the Company.
5. GENERAL PROVISIONS
(a) Entire Agreement. The terms and provisions of this Agreement, together
with the terms and provisions of the Noncompetition Agreement dated the date
hereof between Employee and the Parent, shall constitute the entire
understanding between Employee, the Company and the Parent with respect to the
subject matter hereof, and shall supersede any and all prior agreements or
understandings between Employee, the Company and the Parent, whether written or
oral.
(b) Amendments. This Agreement may be amended or modified only by a
written instrument executed by Employee, the Company and the Parent.
(c) Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State of
California.
(d) Severability. In the event that any terms or provisions of this
Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(e) Assumption. The Company and the Parent shall require any
successor-in-interest (whether direct or indirect or as a result of purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company or the Parent to expressly assume and agree to
perform the obligations
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under this Agreement in the same manner and to the same extent that the Company
or the Parent would be required to perform it if no such succession had taken
place.
(f) Assignability. The rights or obligations contained in this Agreement
shall not be assigned, transferred or divided in any manner by Employee, the
Company or the Parent, without the prior written consent of the other; provided,
however, that nothing in this Section 5(f) shall preclude Employee from
designating a beneficiary to receive any benefits hereunder upon his death, or
the executors, administrators or other legal representatives of Employee or his
estate from assigning any rights hereunder to the person(s) entitled thereto.
Notwithstanding the foregoing, this Agreement shall be assignable by the Company
without Employee's consent and be binding on (i) the Parent or any other
affiliate of the Company, and (ii) any entity which by purchase of assets,
merger or otherwise, becomes a successor to the business of the Company or the
Parent.
(g) Waiver of Breach. Any waiver of any breach of employment terms set
forth herein shall not be construed to be a continuing waiver or consent to any
subsequent breach on the part of Employee, the Parent or the Company.
(h) Headings. The headings of paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation and
performance of any of the provisions of this Agreement.
(i) Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered or if mailed by United States certified or registered mail,
prepaid, to the parties or their permitted assignees at the following addresses
(or at such other address as shall be given in writing by either party to the
other):
To: Tylan General, Inc.
9577 Chesapeake Drive
San Diego, California 92123
Attn: Chief Executive Officer
To: Span Instruments, Inc.
2201 Avenue K
Plano, Texas 75074
Attn: President
To: ________________________
________________________
________________________
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<PAGE> 59
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
on the day and year first written above.
TYLAN GENERAL, INC.
By:
-----------------------------------------------------
Its: Chairman of the Board, President
and Chief Executive Officer
SPAN INSTRUMENTS, INC.
By:
---------------------------------------------------------
Its: President
EMPLOYEE
- ------------------------------------------------
[Name]
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<PAGE> 60
EXHIBIT 6.5
PROPOSED FORM OF OPINION LETTER
OF GARDERE & WYNNE, COUNSEL TO SPAN
1. Each of Span and Ocala has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Texas. Each of Span
and Ocala has the requisite corporate power to own its property and assets and
to conduct its business as it is currently being conducted and to the best of
counsel's knowledge is qualified as a foreign corporation to do business and is
in good standing in each jurisdiction in the United States in which the
ownership of its property or the conduct of its business requires such
qualification and where any statutory fines or penalties or any corporate
disability imposed for the failure to qualify would materially and adversely
affect Tylan, its assets, financial condition or operations. To the best of
counsel's knowledge, except for Ocala, Span has no subsidiaries.
2. All corporate action on the part of Span, its Board of Directors and its
shareholders necessary for the authorization, execution, delivery and
performance of the Reorganization Agreement has been taken. The Reorganization
Agreement has been duly and validly authorized, executed and delivered by Span
and constitutes a valid and binding agreement of Span enforceable against Span
in accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights, and subject to general equity principles and
to limitations on availability of equitable relief, including specific
performance.
3. The Reorganization Agreement, the Shareholder Agreements and the
Affiliate Agreements (collectively, the "Agreements") have been duly and validly
authorized, executed and delivered by each of the Shareholders and constitute
valid and binding agreements of the Shareholders enforceable against each of
them in accordance with their terms, except as indemnity obligations under
Sections 8.1 of the Reorganization Agreement may be limited by applicable laws
and except as enforcement of each of the Agreements may be limited by applicable
bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights, and subject to general equity principles and
to limitations on availability of equitable relief, including specific
performance.
4. The authorized capital stock of Span consists of 500,000 shares of
Common Stock, no par value, of which 265,699 shares are issued and outstanding.
The authorized capital stock of Ocala consists of 1,000,000 shares, $0.01 par
value, of which 100,000 shares are issued and outstanding, of which 75,000
shares are owned by Span. All of the issued and outstanding shares of Span and
Ocala (i) have been duly authorized and validly issued, (ii) are fully paid and
non-assessable and (iii) have been issued in full compliance with all applicable
securities laws. To the best of counsel's knowledge, there are no subscriptions,
options, warrants, stock appreciation rights, calls, rights, convertible
securities or other agreements or commitments of any character relating to
issued or unissued capital shares or other securities of Span or Ocala, or other
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any capital shares of Span or Ocala. To the best of counsel's
knowledge, none of the outstanding shares of Span or Ocala's capital stock are
subject to any preemptive right other than the preemptive rights provided in
their respective Certificates of Incorporation, co-sale right, right of first
refusal or other similar right (other than with respect to the shares of Ocala
owned by Span, as provided in Section 5.1 of the Shareholders Agreement dated
).
5. The execution, delivery and performance by Span of the Reorganization
Agreement and the consummation by Span of the transactions contemplated therein
will not violate any provision of Span's or Ocala's charter or bylaws, and will
not constitute a material default (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture or other evidence of indebtedness of Span
or Ocala or any material license agreement, lease or other material contract,
instrument or obligation to which Span or Ocala is a party or by which Span or
Ocala or any of either of their assets may be bound, and will not violate or
contravene (i) any governmental statute, rule or regulation applicable to Span
or Ocala or (ii) any order, writ, judgment, injunction, decree, determination or
award which has been entered against Span or Ocala and of which we are aware,
the violation or contravention
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of which would materially and adversely affect Span or Ocala, or either of their
assets, financial condition or otherwise.
6. To the best of counsel's knowledge, there is no action, proceeding or
investigation pending or overtly threatened in writing against Span or the
Shareholders before any court or administrative agency that questions the
validity of the Agreements or might result in any material adverse change in the
assets, financial conditions or operations of Span.
7. All consents, approvals, authorizations, or orders of, and filings,
registrations, and qualifications with any regulatory authority or governmental
body in the United States required for the consummation by Span and the
Shareholders of the transactions contemplated by the Reorganization Agreement
have been made or obtained.
8. In the course of the preparation of the Registration Statement and the
Prospectus/Joint Proxy Statement, we have participated in discussions and
conferences with officers of Tylan and Span and with representatives of their
respective independent public accountants during which successive drafts of the
Registration Statement and the Prospectus/Joint Proxy Statement were reviewed
and we have also reviewed and discussed with various of such persons materials
submitted for use in the Registration Statement, the Prospectus/Joint Proxy
Statement and certain other data and information furnished in support of the
statements made therein. While we have not independently verified, are not
passing upon and assume no responsibility for the accuracy, completeness or
fairness of the Registration Statement or the Prospectus/Joint Proxy Statement,
we advise you that, with regard to Span, nothing has come to our attention which
caused us to believe that the Registration Statement as of its effective date
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus/Joint Proxy Statement, as of its date and
as of the date hereof, contained or contains an untrue statement of a material
fact or omitted or omits to state a material fact required to be stated therein
or necessary in order to make the statement therein, in the light of the
circumstances under which they were made, not misleading (except, in each case,
for the financial statements, schedules and other financial and statistical
information derived therefrom, as to which we express no view).
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EXHIBIT 6.14
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (the "Agreement") is made this day of
1996, by and between TYLAN GENERAL, INC., a Delaware corporation
("Tylan General"), and the undersigned shareholder ("Shareholder") of SPAN
INSTRUMENTS, INC., a Texas corporation ("Span").
RECITALS
A. Tylan General, TYLAN GENERAL ACQUISITION SUBSIDIARY, INC., a Delaware
corporation ("Tylan General Sub"), Span, Shareholder and the other shareholders
of Span have entered into an Agreement and Plan of Reorganization dated as of
February 20, 1996 (the "Reorganization Agreement"), providing for the merger of
Tylan General Sub with and into Span pursuant to the terms and conditions of the
Reorganization Agreement (the "Merger") and setting forth certain
representations, warranties, covenants and agreements which each of the parties
thereto is making thereby in connection with the Merger.
B. The Reorganization Agreement contemplates that the Shareholder has voted
his Span Common Shares (as defined in the Reorganization Agreement) in favor of
the Merger and will agree not to compete with Tylan General in the manner and to
the extent herein set forth.
C. To comply with the Reorganization Agreement and to induce Tylan General
to proceed to consummate the Merger, Shareholder has agreed to enter into this
Agreement.
AGREEMENT
NOW, THEREFORE, the parties hereby agree as follows:
1. Defined Terms. Capitalized terms used in this Agreement and not
otherwise defined shall have the meanings given them in the Reorganization
Agreement.
2. Acknowledgment By Shareholder. Shareholder acknowledges that by virtue
of his position with Span he has developed considerable expertise in the
business operations of Span and has had access to trade secrets and confidential
business methods, plans and practices considered confidential by Span and not
generally known in its industry. Shareholder recognizes that this information
will have commercial value in the business in which Tylan General is engaged and
therefore that Tylan General would be irreparably damaged if Shareholder were to
enter into an activity competing or interfering with Span's business in
violation of the terms of this Agreement or if Shareholder were to disclose or
make unauthorized use of any confidential information concerning the business of
Span. Accordingly, Shareholder expressly acknowledges that he is voluntarily
entering into this Agreement and that the terms and conditions of this Agreement
are fair and reasonable to Shareholder in all respects and that Tylan General,
in addition to any other remedies which it may have, shall be entitled, as a
matter of right, to injunctive relief, including specific performance, in any
court of competent jurisdiction with respect to any actual or threatened breach
by Shareholder of any of the provisions of Sections 3 and 4 hereof.
3. Non-Competition. Until the third anniversary of the Closing Date,
Shareholder agrees that he shall not:
(a) directly or indirectly own, manage, operate, or control, in whole
or in part, or become engaged, directly or indirectly, as a director,
officer, employee, partner, principal, agent, or representative of or
consultant to, any business, enterprise, firm or person engaged in direct
competition with Tylan General's or Span's current businesses (a "Competing
Company"), in (i) every state in which Tylan General or Span currently
operates their respective businesses, (ii) every state in which Tylan
General or Span has taken action to facilitate commencement of the
operation of their respective businesses and (iii) every state in which
Tylan General or Span has current definite plans to operate their
respective businesses within the next year (the "Territory"); or
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<PAGE> 63
(b) directly or indirectly purchase equity in, lend money to, borrow
money from or otherwise render financial assistance to or accept financial
assistance from any Competing Company.
Notwithstanding the above, Shareholder shall not be deemed to be engaged
directly or indirectly in any business in contravention of this Agreement, if
Shareholder participates in any such business solely as a passive investor in up
to 1% of the equity securities of a company or partnership, the securities of
which are publicly traded.
4. Non-Interference. Shareholder further agrees that until the third
anniversary of the Closing Date, he will not, without the prior written consent
of Tylan General, (i) interfere with the business of Span or Tylan General by
soliciting, attempting to solicit, inducing, or otherwise causing any employee
or consultant of Span or Tylan General to terminate his or her employment as
such in order to become an employee, consultant or independent contractor to or
for any Competing Company or to or for any company with which Shareholder is
associated in any way; or (ii) induce or attempt to induce any customers,
suppliers, distributors, resellers, or independent contractors of Span to
terminate their relationships with Span.
5. Independence of Obligations. The covenants of Shareholder set forth in
this Agreement shall be construed as independent of any other agreement or
arrangement between Shareholder, on the one hand, and Span or Tylan General or
any of their subsidiaries, on the other, and the existence of any claim or cause
of action by Shareholder against Span or Tylan General or any of their
subsidiaries shall not constitute a defense to the enforcement of such covenants
against Shareholder.
6. Severability. If any provision of this Agreement or the application of
such provision to any person or circumstances shall be held invalid by a court
of competent jurisdiction, the remainder of the provision held invalid and the
application of such provision to persons or circumstances, other than the party
as to which it is held invalid, shall not be affected.
7. Notices. All notices or other communications hereunder shall be in
writing and deemed given if and when delivered to a party in person, or if and
when mailed by registered or certified mail, return receipt requested, to the
parties at the addresses set forth below or such other addresses as shall be
specified by notice to the other party hereunder:
To Tylan General at: TYLAN GENERAL, INC.
9577 Chesapeake Drive
San Diego, CA 92123
Attn: David J. Ferran
To Shareholder at: ________________________
________________________
________________________
8. Waiver of Breach. No waiver of any provisions hereof by any party shall
be deemed a waiver by any such party, and no such waiver shall be deemed a
continuing waiver of any provision hereof by such party.
9. Assignment. This Agreement shall be assignable by Tylan General only to
any person, firm or corporation which may become a successor in interest by
purchase, merger or otherwise to Tylan General, or the business operated by
Tylan General, or the business operated by Span prior to the Merger, provided
Shareholder receives prompt notice of such assignment. This Agreement is not
assignable by Shareholder.
10. Entire Agreement; Amendment. This Agreement supersedes all prior
agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and, together with the Reorganization Agreement and any
other agreement to be executed by each undersigned party pursuant to the
Reorganization Agreement, contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except expressly by an instrument in writing signed by all the parties hereto.
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<PAGE> 64
11. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of Tylan General and its permitted successors and assigns and
Shareholder and their respective heirs and legal representatives.
12. Governing Law. This Agreement shall be deemed a contract made under,
and for all purposes shall be construed in accordance with, the laws of the
State of California.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
date first above written.
SHAREHOLDER
--------------------------------------
TYLAN GENERAL, INC.
By:
------------------------------------
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<PAGE> 65
EXHIBIT 7.3
FORM OF OPINION OF COOLEY GODWARD,
COUNSEL TO TYLAN AND TYLAN SUB
, 1996
Span Instruments, Inc.
1947 Avenue K
Plano, TX 75074
Ladies and Gentlemen:
We have acted as counsel for Tylan General, Inc., a Delaware corporation
("Tylan"), and Tylan General Acquisition Subsidiary, Inc., a Delaware
corporation ("Tylan Sub"), in connection with that certain Agreement and Plan of
Reorganization among Tylan, Tylan Sub, Span Instruments, Inc., a Texas
corporation ("Span"), and the shareholders of Span (the "Shareholders") dated as
of July , 1996 (the "Reorganization Agreement") pursuant to which Tylan Sub
will merge with and into Span (the 'Merger"). We are rendering this opinion
pursuant to Section 7.3 of the Reorganization Agreement. Except as otherwise
defined herein, capitalized terms used but not defined herein have the
respective meanings given to them in the Reorganization Agreement.
In connection with this opinion, we have examined and relied upon the
representations and warranties as to factual matters contained in and made
pursuant to the Reorganization Agreement, the Shareholder Agreements and the
Affiliate Agreements (collectively, the "Agreements") by the various parties and
originals or copies certified to our satisfaction, of such records, documents,
certificates, opinions, memoranda and other instruments as in our judgment are
necessary or appropriate to enable us to render the opinion expressed below.
Where we render an opinion "to the best of our knowledge" or concerning and item
"known to us" or our opinion otherwise refers to our knowledge, it is based
solely upon (i) an inquiry of attorneys within this firm who perform legal
services for Tylan, (ii) receipt of a certificate executed by an officer of
Tylan or Tylan Sub covering such matters and (iii) such other investigation, if
any, that we specifically set forth herein.
In rendering this opinion, we have assumed: the genuineness and
authenticity of all signatures on original documents; the authenticity of all
documents submitted to us as originals; the conformity to originals of all
documents submitted to us as copies; the accuracy, completeness and authenticity
of certificates of public officials; and the due authorization, execution and
delivery of all documents (except the due authorization, execution and delivery
of the Agreements by Tylan and the Reorganization Agreement by Tylan Sub) where
authorization, execution and delivery are prerequisites to the effectiveness of
such documents. We have also assumed: that all individuals executing and
delivering documents had the legal capacity to so execute and deliver; that you
have received all documents you were to receive under the Agreements; that the
Reorganization Agreement is an obligation binding upon you and that the
Agreements are obligations binding upon the Shareholders; that the parties to
the Agreements other than Tylan and Tylan Sub have filed any required California
franchise or income tax returns and have paid any required California franchise
or income taxes; and that there are no extrinsic agreements or understandings
among the parties to the Agreements that would modify or interpret the terms of
the Agreements or the respective rights or obligations of the parties
thereunder.
Our opinion is expressed only with respect to the federal laws of the
United States of America, the laws of the State of California and the General
Corporation Law of the State of Delaware. We express no opinion as to whether
the laws of any particular jurisdiction apply, and no opinion to the extent that
the laws of any jurisdiction other than those identified above are applicable to
the subject matter hereof. We are not rendering any opinion as to compliance
with any antitrust laws or antifraud law, rule or regulation relating to
securities, or to the sale or issuance thereof.
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<PAGE> 66
With regard to our opinion in paragraph 4 below, we have examined and
relied upon (i) a certificate executed by an officer of the Company, to the
effect that the consideration for all outstanding shares of capital stock of the
Company was received by the Company in accordance with the provisions of the
applicable Board of Director resolutions and any plan or agreement relating to
the issuance of such shares, and (ii) a certificate executed by Tylan's transfer
agent, The First National Bank of Boston, as to the number of shares of Common
Stock issued and outstanding as of , 1996; and we have undertaken no
independent verification with respect thereto.
With regard to our opinion in paragraph 6 below with respect to any
material default under the provisions of any Material Contract, we have relied
solely upon an examination of the agreements and instruments filed as exhibits
to the Company's Annual Report on Form 10-K for the fiscal year ended October
29, 1995 (collectively, the "Material Contracts"); we have made no further
investigation. On the basis of the foregoing, in reliance thereon and with the
foregoing qualifications, we are of the opinion that:
1. Each of Tylan and Tylan Sub has been duly incorporated and is a
validly existing corporation in good standing under the laws of the State
of Delaware. Each of Tylan and Tylan Sub has the requisite corporate power
to own its property and assets and to conduct its business as it is
currently being conducted and, to the best of our knowledge, is qualified
as a foreign corporation to do business and is in good standing in each
jurisdiction in the United States in which the ownership of its property or
the conduct of its business requires such qualification and where any
statutory fines or penalties or any corporate disability imposed for the
failure to qualify would materially and adversely affect Tylan, its assets,
financial condition or operations.
2. The Agreements have been duly and validly authorized, executed and
delivered by Tylan and constitute valid and binding agreements of Tylan
enforceable against Tylan in accordance with their respective terms, except
as indemnity obligations under Section 9.1 of the Reorganization Agreement
may be limited by applicable laws and except as enforcement of the
Agreements may be limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws affecting
creditors' rights, and subject to general equity principles and to
limitations on availability of equitable relief, including specific
performance.
3. The Reorganization Agreement has been duly and validly authorized,
executed and delivered by Tylan Sub and constitutes a valid and binding
agreement of Tylan Sub enforceable against Tylan Sub in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting creditors' rights, and subject to general equity principles and
to limitations on availability of equitable relief, including specific
performance.
4. Tylan's authorized capital stock consists of 10,000,000 shares of
Preferred Stock, none of which there are issued and outstanding, and
50,000,000 shares of Common Stock, $.001 par value, of which there are
outstanding shares. The outstanding shares have been duly
authorized and validly issued and are fully paid and nonassessable; and no
preemptive rights or rights of refusal in favor of stockholders exist with
respect to the Common Stock of Tylan, or the issue and sale thereof, under
the Certificate of Incorporation or Bylaws of Tylan.
5. The shares of Tylan Common Stock issuable to Shareholders
in the Merger (the "Shares") have been duly authorized, and upon issuance
and delivery upon consummation of the Merger in accordance with the terms
of the Reorganization Agreement, the Shares will be validly issued, fully
paid and nonassessable.
6. The execution and delivery by Tylan and Tylan Sub of the
Reorganization Agreement and the issuance of the Shares pursuant thereto
will not violate any provision of Tylan's or Tylan Sub's charter or bylaws,
and will not constitute a material default under the provisions of any
Material Contract, and will not violate or contravene (a) any governmental
statute, rule or regulation applicable to Tylan or Tylan Sub or (b) any
order, writ, judgment, injunction, decree, determination or award which has
been entered
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against Tylan or Tylan Sub and of which we are aware, the violation or
contravention of which would materially and adversely affect Tylan, its
assets, financial condition or operations.
7. To the best of our knowledge, there is no action, proceeding or
investigation pending or overtly threatened against Tylan or Tylan Sub
before any court or administrative agency that questions the validity of
the Reorganization Agreement or might result in any material adverse change
in the assets, financial conditions or operations of Tylan.
8. All consents, approvals, authorizations or orders of, and filings,
registrations and qualifications with any regulatory authority or
governmental body in the United States required for the consummation by
Tylan and Tylan Sub of the transactions contemplated by the Reorganization
Agreement have been made or obtained, except for any blue sky filings
required by applicable state securities laws.
9. The Registration Statement became effective under the Securities
Act of 1933, as amended (the "Act"), by order of the Securities and
Exchange Commission on , 1996, and, to the best of our
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or threatened under the Act.
10. The Registration Statement and the Prospectus/Joint Proxy
Statement and any supplements or amendments thereto (except for the
financial statements, the schedules thereto and other financial and
statistical information included therein as to which we express no opinion)
comply as to form in all material respects with the Securities Act and
rules and regulations promulgated thereunder.
***
In the course of the preparation of the Registration Statement and the
Prospectus/Joint Proxy Statement, we have participated in discussions and
conferences with officers of Tylan and Span and with representatives of their
respective independent public accountants during which successive drafts of the
Registration Statement and the Prospectus/Joint Proxy Statement were reviewed
and we have also reviewed and discussed with various of such persons materials
submitted for use in the Registration Statement, the Prospectus/Joint Proxy
Statement and certain other data and information furnished in support of the
statements made therein. While we have not independently verified, are not
passing upon and assume no responsibility for the accuracy, completeness or
fairness of the Registration Statement or the Prospectus/Joint Proxy Statement,
we advise you that, with regard to Tylan, nothing has come to our attention
which caused us to believe (i) that the Registration Statement as of its
effective date contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus/Joint Proxy Statement,
as of its date and as of the date hereof, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading (except, in each case, for the financial statements, schedules and
other financial and statistical information derived therefrom, as to which we
express no view), or (ii) that any of the documents incorporated by reference in
the Prospectus/Joint Proxy Statement, when such documents were filed with the
Securities and Exchange Commission, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (except, in each case, for the
financial statements, schedules and other financial and statistical information
derived therefrom, as to which we express no view).
8-3
<PAGE> 68
This opinion is intended solely for your benefit and is not to be made
available to or be relied upon by any other person, firm or entity without our
prior written consent.
Sincerely,
COOLEY GODWARD CASTRO
HUDDLESON & TATUM
By:
--------------------------------------
D. Bradley Peck
8-4
<PAGE> 1
Exhibit 99D
STOCK SETTLEMENT AGREEMENT
This Stock Settlement Agreement (the "Agreement") is entered into as of
the 1st day of July, 1996, by and between Don E. Whitson ("Whitson") and
Linda Sue Dunkel ("Dunkel").
WHEREAS, Whitson and Dunkel entered into that certain Agreement Incident
to Divorce (the "Divorce Agreement");
WHEREAS, pursuant to Section 5.02(b) of the Divorce Agreement, Whitson
agreed to give Dunkel certain shares of common stock of Span Instruments, Inc.
("Span") owned by Whitson.
WHEREAS, Whitson and Dunkel agree that in full settlement of Section
5.02(b) of the Divorce Agreement, Whitson shall pay to Dunkel $36,000 and give
Dunkel ten percent (10%) of the shares of Common Stock of Tylan General, Inc.
("Tylan"), he receives upon the merger (the "Merger") of Span with Tylan
General Acquisition Subsidiary, Inc.
AGREEMENT
NOW, THEREFORE, BE IT RESOLVED, that the parties agree as follows:
1. Transfer Stock. In complete settlement of Whitson's obligations
under the Divorce Agreement, including, without limitation, Section 5.02(b),
Whitson agrees (a) to pay Dunkel $36,000 in cash and (b) to give Dunkel ten
percent (10%) of the shares of Tylan's Common Stock, he receives pursuant to
the Merger. Whitson shall request that Tylan issue such shares in the name of
Dunkel.
2. Release. Dunkel hereby irrevocably and unconditionally releases
and forever discharges Whitson and Span from any and all agreements,
obligations, promises, liabilities, claims, rights, demands, costs and expenses
of any kind whatsoever, whether known or unknown, suspected or unsuspected,
fixed or contingent, which Dunkel now has, owns, holds or claims to have, or
any time heretofore had, owned, held or held against Whitson or Span pursuant
to the Divorce Agreement.
3. Binding Nature. This Agreement is executed and delivered by the
parties hereto, and is legally valid and the binding obligation of each of the
parties in accordance with its terms.
4. Further Assurances. Each party hereto, without further
consideration, agrees to execute and deliver such other documents and to take
such other action as may be necessary to more effectively consummate or
implement the provisions of this Agreement.
5. Governing Law and Jurisdiction. This Agreement shall be
construed in accordance with and all issues relating hereto shall be governed
by the laws of the State of Texas. Each of the parties irrevocably consent to
the jurisdiction of the federal and state courts located in Dallas County,
Texas, with respect to any legal action relating to this Agreement or the
transactions contemplated hereby.
6. Entire Agreement. This Agreement sets forth the entire agreement
between the parties hereto and supersedes any other agreements or
understandings between or among the parties hereto pertaining to the subject
matter hereof.
Dated this 1st day of July, 1996.
/s/ DON E. WHITSON
-----------------------------------
Don E. Whitson
/s/ LINDA SUE DUNKE
-----------------------------------
Linda Sue Dunke
